Customers at a shopping mall in Kampala. The Ebola outbreak is unlikely to result in the economy contracting. PHOTO/ EDGAR R. BATTE

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Ebola outbreak: Is it another spanner in the works?

What you need to know:

While it is too early to establish the impact of the Ebola outbreak on the economy, the only challenge according to analysts will manifest if the situation is not contained.

Covid-19 pandemic. Russia-Ukraine war. And now the Ebola outbreak. These are the immediate realities that the economy must deal with.

Although the war with the first two situations hasn’t been won yet, the causalities have been immense, with the economy bearing the brunt. In the mix of all that, the Ebola virus disease (EVD), formerly known as Ebola hemorrhagic fever, a rare but severe, often fatal illness in humans, reared its ugly head, again.

It is like each time the economy is trying to find its footing something seems to stand in the way. Last week, as the Democratic Republic of the Congo (D.R.C) was declaring the end of an Ebola outbreak that re-emerged about eight weeks ago in the North Kivu Province,  neighbouring Uganda was racing to curb an unrelated outbreak declared about a fortnight ago.

With only one case confirmed, the just-ended outbreak was one of the DRC’s least catastrophic, according to World Health Organisation (WHO) compared to the previous outbreak – the country’s 14th  in which there were four confirmed cases and five deaths – was declared over on 4th July this year.

While the Ebola outbreaks in the Democratic Republic of the Congo have been caused by the Zaire ebolavirus – one of the six species of the Ebola genus, the one Uganda is fighting, according to the WHO statement issued on Tuesday last week, is the fast-evolving outbreak of Sudan ebolavirus, with 36 cases (18 confirmed) and five deaths reported as of the September 25.
As of last week, the Sudan ebolavirus outbreak has since affected three districts: Mubende, Kyegegwa and Kassanda across 120 kilometres. By early last week, 399 contacts had been identified and were being monitored as the search continues to identify other people who may be at-risk.

Domestic tourists on board for a three- hour boat drive on Victoria Nile. Unless  the ebola outbreak subsides quickly, the sector’s plan to achieve its targets of earning at least an additional $100m (Shs387.3b) in four years, has just gotten steeper. PHOTO/Paul Murungi

There are 30 people undergoing care—13 of whom are confirmed to have Ebola and 17 of whom are suspected to have contracted the disease. While there is no specific treatment for Sudan ebolavirus, those who are sick are receiving supportive care, which significantly improves their prognosis.

Impact on economy
Going by what happened elsewhere in the continent, apart from the painful health effects, the Ebola epidemic does not spare the economy.

The 2014–2016 outbreak in West Africa was the largest Ebola outbreak since the virus was first discovered in 1976. The outbreak started in Guinea and moved across land borders to Sierra Leone and Liberia.

According to 2014 projections from the World Bank, an estimated $2.2 billion was lost in 2015 in the Gross Domestic Product (GDP) of the three countries.
The same may not occur here. But this demonstrates how deadly this epidemic can hit the economy, particularly if community engagement, according to experts, is not part of the fixture, a key component in successfully controlling outbreaks.

Lower investment and a substantial loss in Private sector growth is always part of the story as investors tend to play  the “wait and see” game before committing their investment.
Importantly perhaps, the epidemic had an adverse effect on agricultural market chains in the three West African countries, particularly on communities that rely on agriculture as the main source of income.

The Ebola epidemic mostly impacted the transporting of agricultural goods to consumption areas. Workers were afraid of traveling to contaminated areas, and the number of traders decreased by 20 percent at the height of the epidemic. This lowered farmers’ incomes and led to unstable crop prices.

Since Uganda is an agricultural country, it is a no brainer that if communities are restricted or unable to produce for their livelihoods and for market, that is a recipe for another disaster.

Therefore, for Uganda where agriculture is responsible for the about 70 per cent of the population, any interruption in this key economic sector is akin to attempting suicide.   
An Ebola outbreak may also lead to restrictions on trade and transportation to prevent transmission of the virus. This may limit goods moved within a country. It also means limiting the movement of people and goods between countries.

To prevent Ebola from crossing borders, travelers will be subjected to another layer of restrictions which often times have cost implications like with Covid-19 screening and related restrictions.
For example, in 2014, Sierra Leone declared a lock down for three days to decrease the movement of people and suppress the spread of the disease.

The country also placed quarantine restrictions on high-risk areas and set curfews, which lasted as long as several months in some areas. Such situations can have an impact on the economy.

Hardest hit
Tourism is the number one casualty. Just the news of an Ebola outbreak alone prevents tourists from traveling to those countries with an outbreak. Tourism, has until the pandemic, been Uganda’s leading foreign exchange earner.  

Unless this situation changes quickly, the sector’s plan to achieve its targets of earning at least an additional $100m (Shs387.3b) in four years, has just gotten steeper.

This ambitious plan by UTB is aimed at boosting the pre-Covid-19 tourism revenues that were in the range of between $1.3 billion and 1.4 billion as of Dec 2019 from 1.6 million tourists.
When the Ebola epidemic hit West Africa, borders closed and airlines stopped. According to the World Travel and Tourism Council, tourist arrivals went down by half from 2013 to 2014. In addition, tourists saw the entire continent of Africa as a risk, even though the Ebola outbreak was not all over Africa.

Currently, the neighbouring Kenya is already concerned about the epidemic outbreak in the region for her tourism industry although she  has not registered any case yet. Even when the Ebola outbreak was highest in West Africa, located thousands of miles from away from the (West Africa) Ebola zone, Kenya still saw a drastic decrease in tourism due to fear of Ebola. According to the Center for Disease Control  (CDC), most travelers are at very low risk of getting Ebola. Despite this, tourism declines during outbreaks.

A travel advisory is already out, warning potential tourists not to come to Uganda and by extension, the East African region.  
“The news about Ebola is one that no country that is naturally endowed like ours wants a mention of because it scares away potential guests, which in turn affects the tourism sector,” Mr Simplicious Gessa, the senior public relations officer, Uganda Tourism Board (UTB) told Prosper Magazine when contacted last week.  

UTB is, however, confident that the current outbreak is not beyond control, urging tourists not to cancel their visits, given that the situation is not only under control but also manageable.
“Tourism sites are still open. We are encouraging our tourists to follow the normal procedures and health guidelines,” he said.

What experts say …
The director research and policy at Bank of Uganda, Dr Adam Mugume, is optimistic about the economy’s resilience, saying it will pull through.

“There are several shocks reverberating in the economy, but the economy has remained resilient, which points to a firm foundation on which the economy is established, namely sound macroeconomic management,” Dr Mugume notes in an email response to Prosper Magazine.
 

A health worker wearing protective gear before handling Ebola patients. Ebola outbreaks result from the virus spilling from an animal host to a human. PHOTO/MICHAEL KAKUMIRIZI

He continues: “Though still early to make any meaningful assessment, if Ebola was to spread widely, it would negatively add to the already prevailing shocks because it would strain further the National Budget which is already under enormous pressure; constrain tourism which was beginning to firm up as the Covid-19 impact wanes, and could challenge the services sector which contributes 43 percent of GDP, the same sector more adversely affected by Covid-19.

“The Ebola outbreak is unlikely to result in the economy contracting since Uganda has established mechanism of managing these health related shocks.”

The research fellow at the Economic Policy Research Centre (EPRC), Corti Paul Lakuma, says it is too early to establish the impact of the Ebola outbreak on the economy.
The worry, according to the EPRC research analyst, will manifest when the situation is not contained as it should.

“If it is not contained, we may suffer many travel advisories, advising travelers and conferences to avoid Uganda. Such travel advisories will have an impact on the inflow of tourism foreign exchange (dollars) in Uganda, affecting incomes in that sector.”

Already, tension within the region, particularly in border towns like Kitale in Kenya, are on high alert—watching out for travelers from Uganda.

Managing the epidemic, he believes, will be by obeying the Ministry of Health directives and messaging such as hygiene, avoiding crowded places, and use of sanitiser, among other recommendations.
In her response, Dr Madina Guloba, a senior research fellow at EPRC, believes that stringent measures to suppress the spread of Covid-19 are unlikely to be instituted when dealing with the Ebola outbreak this time.

But national budgets will be “reallocated to this in form of mitigation and enforcement.” She also suspects that the “Ebola outbreak will be used as another tool to seek for external support.”
Dr Fred Muhumuza, renowned economist, says that not much impact will be felt on the economy, given the scale of the outbreak as of last week.

He is also optimistic that the history and the knowledge about handling epidemics in the country will see the country overcome this health challenge with a huge bearing on economic sectors.
Since 2000, Uganda has dealt with Ebola outbreaks five times. In all situations, the country overcame the epidemics, including in 2000 and 2012 when the case fatality was at 53 per cent and 57 per cent respectively.

Stephen Kaboyo, an astute financial markets expert, notes that Ebola is a destructive force that dents investor confidence in the economy in a short time.

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