Lives and Livelihoods: The Economic Impact of Ebola in West Africa
The Ebola epidemic ravaged West Africa in 2014; 28,600 people were infected and 11,300 died. The virus not only caused a public health crisis, but also crippled the affected countries’ economies. During the outbreak, the international community responded too late and initially provided insufficient funding. Even with international assistance, the Ebola virus took a heavy toll on the work force, severely damaging the labor market and national productivity. Today, the most affected nations should be pursuing two goals. First, to deal with the aftermath of the 2014 crisis, governments should be encouraging trade to give their economies a boost. Second, West African countries should be strengthening their monitoring systems.When the initial outbreak became apparent, the World Bank issued an emergency response commitment of up to $500 million, the IMF pledged $130 million in crisis funding, and the G-20 announced $300 million to combat Ebola. Additionally, the United States, European Union, and United Kingdom made commitments, and USAID and CDC were on the ground. The onset of the disease was sudden and expansive; the WHO estimated more than 3,500 Ebola cases with over 1,900 deaths in September 2014 alone. Though it had originally proposed a $100 million commitment in July 2014, the WHO increased its commitment to $600 million the following month (Table 1). This underscored the dire need for emergency stabilization and recovery – and the multilateral organizations’ miscalculations.
Most of the economic impacts came not from sicknesses but from “aversion behavior” to avoid Ebola exposure. Fear of the disease, distrust of government, and cultural norms against quarantine explained some of this behavior. Travel and tourism plummeted significantly in West Africa in the summer of 2014. Trade also declined, as reflected in the fall of the wage and self-employed sectors. The vast majority of people were not working because of direct effects of Ebola, as employees became sick, companies closed down, and employees were unable to travel or transport goods. These employment effects were spread across West Africa irrespective of high rates of Ebola cases in certain cities or areas. Due to Ebola, GDP fell 2-4 percent for Guinea, Sierra Leone, and Liberia (Table 2). Because the poverty rate was already 50-60 percent, the poor became even poorer. Children went without food and parents were unable to provide for them. To make matters worse, schools were closed, further hurting human capital investments. As governments shifted their budgets toward emergency funding for Ebola, development projects took the brunt of the damage; funding set aside for road maintenance, education, and other social services and programs was redirected towards the Ebola response.The World Bank ultimately spent $1.6 billion for the Ebola response, more than triple their original commitment. Officials declared the epidemic to be contained in the winter months of 2015, but the aversion behavior was not. At the community level, quarantines were not adhered to and burials were unsafe, increasing the risks of transmission, illness, and death. Liberia and Sierra Leone experienced civil war during this time, exacerbating the spread of Ebola through refugees and adding further shocks to the economy.
In the end, experts’ prognostications were prescient regarding West Africa’s economic damage due to the Ebola epidemic. Higher unemployment, lost incomes, interrupted schooling, and food insecurity adversely affected West African economy. Commodity price shocks led to the combined loss of $2.8 billion in real GDP and growth declined markedly in 2015 in the three most affected countries; Liberia and Guinea saw nearly no growth at all, while Sierra Leone’s economy contracted by more than 20%.There are many lessons to be drawn from the Ebola epidemic in West Africa. At the forefront, governments must take steps to contain the epidemic, restore confidence, and reduce aversion behavior. By doing so, the countries will effectively mitigate the epidemic’s effects on their economies. Although the the international community ultimately did arrive with resources to counter the spread of Ebola, it was a delayed response. In addition, budget support for these governments was very small when considering losses, bankruptcies, and closures in the private sector. In the long run, poverty outcomes were accentuated wherever the virus evaded eradication.To make up for the economic losses, governments should encourage trade with careful surveillance. There were differentiated impacts in each of the three West African countries; for example, mining activity continued in some areas. In locations where mining continued, export opportunities to areas where mining collapsed could offer a change for economic rehabilitation of communities.Additionally, governments should restore investor confidence. The Ebola outbreak was a temporary shock, not a catastrophic impact, like those caused by war. Because West African households planted and harvested their own crops, there were relatively few immediate food security concerns at the micro level. This offers a solid socioeconomic base for the return of investment to Ebola-stricken cities and towns.As outlined above, the international community would be wise to note the economic lessons from the Ebola epidemic in preparation for a future disease outbreak. The heaviest toll from Ebola was on the most active segment of the population (15-44 years of age), in other words, the labor force. This negatively affected the labor market and national productivity. Emergency preparedness, public health education, virus-detection monitoring, and surveillance mechanisms and programs must be enhanced and established. Otherwise, as the data can attest, the economic results of another viral epidemic will be devastating (Table 3).
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Joniel Cha is pursuing his MA in International Economics and Energy, Resources, and Environment at Johns Hopkins University's School of Advanced International Studies. He is also a graduate staff intern with the Kennan Institute at the Woodrow Wilson Center. He has previously worked for the UNHCR and Transparency International in Ukraine.