The Other Cost of Ebola

The three impoverished West African nations hit hardest by the epidemic are reeling from the economic fallout
street scene in Guinea
“Governments are diverting money in their budgets from basic investment in education and infrastructure to provide an emergency response to Ebola,” says Margaret McMillan. Here, a scene from Macenta, Guinea. Photo: Kenzo Tribouillard/Getty Images
January 20, 2015

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Patient Zero, as he is known, was a 2-year-old toddler living in a village in Guinea. He was the first to die in the current Ebola epidemic. No one knows for certain how he got the disease, but before long, his sister, mother and grandmother became sick and died, followed by a nurse and midwife caring for them. They in turn carried the virus to their own villages. Soon the disease had spread to other countries in Africa.

Ebola has killed more than 8,000 people, primarily in Guinea, Liberia and Sierra Leone, nations that were already struggling with poverty and scarce resources. The disease has not only taken lives—it is having a devastating impact on those nations’ economies.

Margaret McMillan, an associate professor of economics, studies international trade and investment, focusing primarily on developing countries; she has received numerous grants for her work in African nations. Prior to coming to Tufts, she taught math in Mali as a Peace Corps volunteer, worked as an investment banker on Wall Street and managed a credit line for the World Bank in Tanzania. She spoke to Tufts Now about the economic impact of Ebola on Guinea, Liberia and Sierra Leone.

Tufts Now: What was the immediate impact of the epidemic?

Margaret McMillan: These countries already had inadequate health-care facilities and a great number of people living below the poverty line, so the epidemic just made everything harder. Governments are diverting money in their budgets from things like basic investment in education and infrastructure to provide an emergency response to Ebola.

What is the economic status of these countries?

Outsiders “can help by giving assistance on all levels: resources, technical assistance, doctors and nurses,” says Margaret McMillan.The three main countries affected—Guinea, Liberia and Sierra Leone—are extremely poor. The gross national product in Liberia is $2 billion. To put that in perspective, Bernard Madoff stole $55 billion. Bill Gates’ net worth last year was listed at around $80 billion. Liberia is one of the poorest countries in the world.

What are some of the ongoing concerns?

Liberia’s Minster of Commerce and Industry spoke at a conference I attended recently, saying they are cutting wages, restricting fuel usage and banning unessential foreign travel for people in government. If government employees are getting paid less, then other people who are dependent on them have less money, too. Some people just leave their jobs in government. For example, Liberia is having a hard time keeping government health workers, who are supposed to be paid overtime or get special compensation for working in difficult situations, but they’re not getting that money.

What about foreign workers in those countries?

Many are leaving. The impact of that won’t be felt immediately, but it means revenues to governments are reduced as companies from other countries stop projects, such as operating iron ore mines. They haven’t shut them down completely, but many programs have come to a standstill. Still, some of the companies involved are trying to help by providing money. They have an interest in trying to get things back to normal, because they have large investments in these countries, usually for extracting natural resources. But there’s only so much they can do.

How has tourism been affected?

The main impact has been on tourism in other countries in Africa, as there was little or no tourism in the three countries most affected by Ebola. People think of Africa as one entity. Here’s an example: I went to Ethiopia recently and brought back a gift for a friend, who said I had better wash it first because of Ebola—yet there are no reported cases of Ebola in Ethiopia. The average person in the United States thinks that Africa equals Ebola.

What role does fear play in the economic downturn?

The World Bank has issued a report trying to estimate losses. It’s not scientific, but it says fewer people are working in the fields. Part of the reason is because people are sick, but it’s also because people are afraid to go out. So there is lower agricultural output, which means higher food prices. There is less demand for other things produced locally, too, such as cement. All local industries are down.

How much is the epidemic costing?

Most people agree the largest costs are difficult to quantify, but the cost to the three countries in question has been estimated to be $815 million. For perspective, that equals almost half of Sierra Leone’s gross national product.

What can other countries do to help?

They can help by giving assistance on all levels: resources, technical assistance, doctors and nurses. There needs to be investment in basic needs, infrastructure and education.

Are resources from other countries getting to West Africa?

Yes, but there have been problems. There was one story about shipments of protective gear that got stuck in an Ivory Coast airport because flights were suspended between Ivory Coast and the affected countries. Logistics are a nightmare. Even without suspending flights, there are only one or two international flights a day landing in the poorer countries anyway.

Are any of the three countries able to plan beyond the immediate crisis?

Liberia has a post-Ebola stabilization plan. Rehabilitating transportation is high on the agenda, as is investment in electricity. The plan calls for investment in agriculture to stimulate food production and for investment in manufacturing to stimulate employment. Public works programs would mean hiring people, providing cash transfers—there is plenty of work that could be done to build up the infrastructure and provide electricity. These are all things Liberia would have needed to do anyway because it’s such a poor country. But now it has less money.

Marjorie Howard can be reached at marjorie.howard@tufts.edu.

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