Connect the Dots: Ebola & Economic Uncertainty

Posted: Thursday, October 23, 2014 12:00 pm

By Benjamin Akande, Ph.D.

To date, the Ebola virus has infected approximately 9,000 people and killed at least 4,500 in several West African countries. The numbers continue to rise exponentially. The Centers for Disease Control says in a worst-case scenario, the infected numbers could balloon to 1.4 million by mid-January.

The limited spread of the outbreak to Dallas—where a Liberian man died and two nurses have been infected by the virus—and to Spain offer a glimpse of the potential of this epidemic to cause grave health risks and economic uncertainty to the entire globe.

In the countries directly impacted by this outbreak–Liberia, Sierra Leone, Guinea and, to a much lesser extent, Nigeria–fear of the disease has interrupted the daily routine of millions of people, truncated the school year, and kept many from church and the local markets.

The second-biggest casualty of this epidemic has been the economic impact. In recent years, many African countries have experienced unprecedented economic growth. Indeed, eight of the world’s 15 fastest-growing economies are in Africa. They include Nigeria, which is the world’s third fastest-growing economy. Many other African countries, including Liberia and Sierra Leone, have made significant economic progress in recent years and attracted considerable overseas investment only to see all of the gains wiped out by the Ebola epidemic.

The agricultural sector, which accounts for 40 percent of the economic output in Liberia and Sierra Leone, and 25 percent of Guinea’s, has been hit particularly hard. The drop in production has been triggered, in large part, by the Ebola-related deaths of many farmers, which has effectively led to the loss of the planting season.

These events could ultimately hit closer to home in the St. Louis region. Ivory Coast, the world’s largest producer of cocoa, has shut its borders to Liberia and Guinea, countries that are home to a large percentage of the migrant workers who pick cocoa. This labor shortage could delay cocoa exports and lead to a spike in cocoa prices, including the price of products made by local company ConAgra, formerly Ralcorp. Monsanto, which is engaged in limited trading of seeds and crop protection products in West Africa, also is paying close attention to developments in the sub-region.

Nigeria, one of the leading suppliers of oil to the United States, is a key reason why gas prices in the U.S. have remained relatively low over the years. In the face of the Ebola crisis, the government took swift actions in monitoring potential cases and has since been praised for its efforts in holding down the outbreak. The country also has experienced a rise in e-commerce as companies do their part to stock and deliver hygiene products, which help prevent the spread of Ebola.

In the early stages, the epidemic was largely portrayed as an African crisis; but as the struggle to contain what is potentially the biggest health crisis in modern times continues, one thing is increasingly clear: We all have a stake in this fight. Ebola is a global catastrophe that requires all of us to pay attention and do what is necessary to stop the spread.

Benjamin Ola. Akande is a professor of economics and dean of the George Herbert Walker School of Business & Technology at Webster University.