The outbreak of Ebola has triggered a “pandemic of fear” that threatens to kill investor confidence, Donald Kaberuka, the president of the African Development Bank (AfDB), warned.
Some projects have already been scaled down or put on hold, as staff are being pulled out of the affected areas, he said in an interview with Emerging Markets.
He also said that people in Sierra Leone, Liberia and Guinea were paying the price for the West’s response which he criticise as “too little, too late”.
His comments came a day after the World Bank warned that unless it was contained the Ebola virus could wipe $33bn off the economy of the wider west Africa region. The Bank’s chief economist, Kaushik Basu, told Emerging Markets the impact could be “devastating”.
Kaberuka insisted the Ebola outbreak was not a repeat of a Middle Ages-era plague, insisting: “We have the means to deal with it.”
But he acknowledged a lot of damage had already been done beyond the current death toll in west Africa. “We will overcome Ebola, but this pandemic of fear, this psychosis is killing investor confidence, from small and local investors to big mining companies,” he said.
TOO LITTLE, TOO LATE
However Kaberuka criticised the international community’s response as “too slow, too little and too late”. The first cases of Ebola were confirmed last February in one of the most fragile parts of Africa but it was only treated as an emergency five or six months later “because it was a remote African problem”.
“This was a big mistake. The response was slower than anything we have seen maybe in the past three decades,” he said. “We are paying the high price for a late response. This is not an African problem — it is a global public problem.”
Last week, the bank approved a $150m direct budget support to the three affected west African countries to help them cope with macroeconomic shocks, lower levels of foreign exchanges and expenditures. The hit on the economy could range from 2.4% to 7% of GDP, depending on how the crisis was handled, Kaberuka said.
AfDB released $60m in August to be transferred to the World Health Organisation to purchase protective gear and pay health workers as well as supply equipment. “If it is contained by the end of the year, the impact will be minimal,” he said. “You need to show you are in command — empowering governments.”
So far, African financial markets do not seem to have been gripped by Middle Ages-style fear. “Markets have been reacting very rationally at the moment, such as the stock markets in Nigeria,” Kaberuka said.
Kaberuka said the example of Nigeria and Senegal showed the disease could be successfully contained and that the international community had the means to stop the Ebola crisis running out of control. “The world has enough means and knowledge to handle this problem. We know it can be done,” he said.