REOPENING AND REIMAGINING AFRICA: HOW THE COVID-19 CRISIS CAN CATALYZE CHANGE - MCKINSEY
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Reopening and
reimagining Africa:
How the COVID-19 crisis can catalyze change
This article is a collaborative effort by Kartik Jayaram, Kevin Leiby, Acha Leke,
Amandla Ooko-Ombaka, and Ying Sunny Sun, representing views from across the
McKinsey Africa Practice.
May 2020COVID-19 poses a grave threat to lives across a muted economic recovery. A prolonged global
Africa, with the World Health Organization (WHO) slowdown, combined with continued lockdowns
estimating that the continent could see up to in Africa, could plunge the continent into its first
190,000 deaths over the next year if the pandemic economic recession in 25 years while threatening
is not controlled.1 In the face of this challenge, the jobs or incomes of 150 million Africans—one-
governments have acted fast, both to strengthen third of the entire workforce. 3
the capacity of health systems and to contain
African countries need to find smart approaches
the spread of the virus: as of May 19, about half
to reopen economies in a calibrated way that
of Africa’s population lives in countries imposing
brings key industries back into operation while
some type of lockdown. But despite accelerating
ensuring safe ways of working. The COVID-19
case numbers and still-low testing rates in many
crisis will likely persist for some time, and there
countries (Exhibit 1), as well as recent reports
is serious risk of a resurgence in infections.
of a worsening health crisis in hotspots on the
Accordingly, governments will need to build the
continent, some governments have started to
capacity to alternate between reopening and
ease restrictions with caution as economic pain
restricting economies on a granular, local level—
becomes more acute for households.2
akin to developing and flexing a muscle. 4 In the
The economic outlook is also bleak. Globally, first part of this article we shine a spotlight on
while some countries are past their peak rate these approaches to smart reopening, suggesting
of infections, concerns about virus resurgence pathways that countries can adopt to save lives
continue to raise uncertainty. In a recent McKinsey and safeguard livelihoods.
survey of global executives, 40 percent anticipated
Governments will
need to build the
capacity to alternate
between reopening and
restricting economies
on a granular, local
level—akin to developing
and flexing a muscle
1 World Health Organization, “New WHO estimates: Up to 190 000 people could die of COVID-19 in Africa if not controlled”, May 7, 2020.
https://www.afro.who.int/news/new-who-estimates-190-000-people-could-die-covid-19-africa-if-not-controlled.
2 Kartik Jayaram, Acha Leke, Amandla Ooko-Ombaka, and Ying Sunny Sun, Finding Africa’s path: Shaping bold solutions to save lives and
livelihoods in the COVID-19 crisis, McKinsey & Company, April 17, 2020.
3 New York Times, “Covid-19 Outbreak in Nigeria Is Just One of Africa’s Alarming Hot Spots,” May 17, 2020. https://www.nytimes.
com/2020/05/17/world/africa/coronavirus-kano-nigeria-hotspot.html
4 “Crushing coronavirus uncertainty: The big ‘unlock’ for our economies”, McKinsey & Company, May 13, 2020.
2 Reopening and reimagining Africa: How the COVID-19 crisis can catalyze changeExhibit 1
Web
Web
Some African countries are starting to experience exponential growth in
Exhibit of
Some...
African countries are starting to experience exponential growth in cases ...
Exhibit of
cases
Some African countries are starting to experience exponential growth in cases ...
Cumulative confirmed case count (as of May 19, 2020)
Cumulative confirmed case count (as of May 19, 2020)
18 South Africa
18 South Africa
Egypt
16 Egypt
16
Algeria
Algeria
14
Morocco
14
Morocco
Nigeria
12 Nigeria
Ghana
12 Ghana
Reported Senegal
COVID-19
Reported 10 Senegal
cases,
COVID-19 10 Côte d’Ivoire
thousand
cases, Côte d’Ivoire
8 Kenya
thousand
8 Kenya
Ethiopia
6 Ethiopia
6
4
4
2
2
0
00 20 40 60 80
0 20 40 60 80
Days since since March 1
Days since since March 1
… even though testing levels are still generally low
… even though testing levels are still generally
generally low
low
Tests per thousand people (as of May 19, 2020)
Tests per thousand people (as of May 19, 2020) Population, million
Population, million
Mauritius 11.0 1.3
Mauritius
South Africa 11.0
7.1 1.3
59
South
GhanaAfrica 7.1
5.5 59
31
Ghana
Rwanda 5.5
3.5 31
13
Rwanda
Tunisia 3.5
3.2 13
12
Tunisia
Morocco 3.2
2.1 12
37
Morocco
Senegal 2.1
1.6 37
17
Senegal
Kenya 1.6
0.7 17
48
Kenya
Ethiopia 0.7
0.4 48
115
Ethiopia
Nigeria 0.4
0.2 115
206
Nigeria
Mozambique 0.2
0.2 206
30
Mozambique
Iceland 0.2 30
0.3
166.0
Iceland
Italy 47.6 166.0 0.3
60
Italy
United States 32.0 47.6 60
331
United
United States
Kingdom 32.0
25.7 331
68
United
Chile Kingdom 18.325.7 68
19
Chile
South Korea 18.3
14.2 19
51
South
Brazil Korea 0.6 14.2 51
213
Brazil 0.6 213
Source: European Centre for Disease Prevention and Control; Humanitarian Data Exchange (tests performed by country); World Health Organization
Source:European
Source: European Centre
Centre for Disease
for Disease PreventionPrevention and Control;
and Control; Humanitarian Humanitarian
Data Data
Exchange (tests Exchange
performed (tests
by country); performed
World by country);
Health Organization World Health Organization
Reopening and reimagining Africa: How the COVID-19 crisis can catalyze change 3Looking further ahead, however, we believe
that the crisis-driven action currently underway Part 1: Reopening
contains the seeds of a large-scale reimagination
of Africa’s economic structure, service-delivery
African economies
systems, and social contract. The crisis is
accelerating trends such as digitization, market
to safeguard lives
consolidation, and regional cooperation, and
it is creating important new opportunities—
and livelihoods
for example, to boost local manufacturing,
formalize small businesses, and upgrade Many African countries and cities have been under
urban infrastructure. Just as businesses and strict lockdown and other restrictions for over
governments take immediate steps to strengthen two months. During this time, economic pain has
health systems and restart economies, they also become more acute.5
need to think ahead and plan for the continent’s
As countries across the continent start to
“next normal”.
reopen their economies, governments face
These changes and opportunities are the focus tough decisions on how best to manage this
of the second part of this article, which presents process in order to protect lives and safeguard
nine big ideas to reimagine Africa. To develop livelihoods. To date, different countries have
these ideas, we reached out to more than 20 adopted varying approaches: for example, Ghana
leading thinkers across Africa and beyond—and has largely reopened its economy, subject to
asked them how the crisis could catalyze long- physical-distancing measures, while South Africa
term change on the continent. These interviews, has taken a more cautious, phased approach to
combined with McKinsey’s own analysis, make it reopening.6 Our analysis of reopening strategies
clear that a positive transformation is by no means globally and in Africa suggests that governments
inevitable. A powerful, collaborative effort will be can follow a three-step process in designing local
required to ensure that Africa’s “next normal” is response measures to release restrictions in a
characterized by inclusive development, effective calibrated way tailored to their countries’ unique
delivery, and innovative approaches to solve the circumstances.7
continent’s greatest challenges.
Positive transformation is by
no means inevitable ... we must
ensure that Africa's "next normal"
is characterized by inclusive
development, effective delivery,
and innovative approaches
5 Finding Africa’s path, op, cit.
6 Bukola Adebayo, “Ghana lifts lockdown, citing improved testing and 'severe' impact on the poor,” CNN, April 20, 2020, edition.cnn.com
7 See, for example, Andres Cadena, Felipe Child, Matt Craven, Fernando Ferrari, David Fine, Juan Franco, and Matthew Wilson, How to
restart national economies during the coronavirus crisis, McKinsey & Company, April 6, 2020
4 Reopening and reimagining Africa: How the COVID-19 crisis can catalyze changeThe first step is to define a tiered set of local education, transport, food services, and
response measures, from the least restrictive entertainment.
to the most restrictive, to be applied to regions
— Tier 3 could involve restrictions on travel
across the country. Each tier would include
between regions of the country for the general
measures to protect both the general population
population, and mandatory stay-at-home
and high-risk populations (the elderly and people
directives for the at-risk population. A narrower
who are immuno-compromised), and would also
set of sectors would be allowed to operate,
specify which sectors can open and operate.
including agriculture and information and
Depending on a country’s geographic diversity, a
communication technology (ICT).
number of tiers can be established; South Africa,
for example, has implemented a five-tier system.8 — Tier 4 (the most restrictive) could entail a
In a four-tier system, the following measures full lockdown on movement for the general
might apply: population, and quarantine encouraged for
those at risk. Only essential sectors would be
— Tier 1 (the least restrictive) would entail no
allowed to operate, including health and public
restrictions beyond physical distancing, and
administration.
would allow all sectors to operate.
We suggest two tools that governments can apply
— Tier 2 could involve closure of schools and
in implementing a tiered system (Exhibit 2). The
prohibition of mass gatherings, while high-risk
first is the Population Protection Matrix, which
populations would be encouraged to stay at
maps the measures governments can use both
home. A broad set of sectors would be allowed
to protect the general population and to shield
to operate, such as construction, mining,
high-risk groups. The second is the Sector Tiering
manufacturing, banking, and retail—provided
Matrix, which can help guide decisions on which
they can comply with health and safety
sectors of the economy can reopen under each
protocols such as use of personal protective
tier, taking into account both their inherent rate of
equipment (PPE) and temperature checks.
contagion and their economic relevance
But sectors at high risk of transmission would
(Exhibit 3).
be closed or restricted; those might include
The first step is to define a tiered
set of local response measures,
from the least restrictive to the
most restrictive, to be applied
to regions across the country
8 Cyril Ramaphosa, “President Cyril Ramaphosa: South Africa's response to Coronavirus COVID-19 pandemic,” South African
Government, April 23, 2020, gov.za.
Reopening and reimagining Africa: How the COVID-19 crisis can catalyze change 5Web
Exhibit
2
Exhibit of
There
Thereisisaarange
rangeofoftools available
tools to to
available select local
select response
local measures
response andand
measures safely
safely
reopen economic activities.
reopen economic activities
Illustrative range of measures to protect populations and reopen economies
Population-protection matrix Tier 1 Tier 2 Tier 3 Tier 4
Measures to shield those with higher risk of severe
LESS illness from COVID-19 MORE
MORE
Lockdown
Full lockdown
Lockdown
Partial lockdown
Travel constraint
Intra-region
Measures to travel curtailment
curb viral
spread in Travel constraint
the general Inter-region travel
population restrictions
Curfew
Time-based curfews
Shutdown
School closures, banning
of mass gatherings
No restrictions
No restrictions (physical
distancing encouraged)
LESS
Physical Stay at Mandatory Encouraged Mandatory
distancing home stay at quarantine quarantine
encouraged encouraged home
Web
Exhibit
3
Exhibit of
Sectors
Sectors should
shouldbe
bereopened
reopenedinin
a phased manner,
a phased based
manner, on their
based inherent
on their risk ofrisk
inherent
contagion and economic relevance.
of contagion and economic relevance
Sector-tiering matrix Tier 1 Tier 2 Tier 3 Tier 4
Economic relevance
LOW (specific metrics used vary by country) HIGH
LOW Essential
sectors1
(open at all times)
Information and Agriculture
Utilities communication
technology
Manufacturing
Mining Construction
Risk of
contagion
Social Public
services administration
Education
Travel and Transportation Financial
hospitality services
HIGH
1 Essential sectors will be defined by country but could include health (eg, hospitals), grocery stores, utilities, and defense.
¹Essential sectors will be defined by country but could include health (eg, hospitals), grocery stores, utilities, and defense.
6 Reopening and reimagining Africa: How the COVID-19 crisis can catalyze changeThe second step is to “triage” regions or sub- Exhibit 4 shows how the regions of a country
regions across the country to determine which might be triaged into tiers, based on these factors.
tier each of these geographic areas would fall into The Y-axis covers the severity of virus spread,
(Exhibit 4). The triage process would be dynamic considering both the day-to-day growth in case
and would incorporate new data as they emerge. It counts as well as the clinical severity of cases (as
would be based on two criteria: influenced by factors such as demographics and
comorbidities in the population). The readiness of
— The severity of virus spread in a region, a
the health system (on the X-axis) can be assessed
measure which takes into account the extent of
using metrics such as availability of critical hospital
ongoing transmissions as well as the severity
supplies and critical-care beds, testing rates, test
of cases should there be high transmission.
positivity rates, contacts traced successfully, and
— The readiness of the public-health system in confirmed COVID-19 cases isolated.
the region—both the ability of the system to
test, trace, and isolate cases and contacts, and
its medical capacity to treat severe cases.
Exhibit 4
Web
Exhibit of
Triage regions into defined tiers based on their severity of viral spread and
Triage regions into defined tiers based on their severity of viral spread and
health-system readiness
health-system readiness.
Illustrative mapping of regions to tiers Tier 1 Tier 2 Tier 3 Tier 4
HIGH Health-system readiness LOW
HIGH
Region
2 1
6 4
8 9
10 7
13
3
Severity 11
of viral 5
spread 12
LOW
Reopening and reimagining Africa: How the COVID-19 crisis can catalyze change 7The third and ongoing step is to monitor older populations tend to live together with
progress continuously. Once regions are triaged younger members of their family.9 Shielding
and measures are implemented, continuous would need to be community-led rather
assessments will be required to ensure that these than centrally imposed: governments could
measures are being adhered to. Governments empower communities to design, implement,
would need to identify the triggers or thresholds and manage shielding interventions, and
for moving a region into a less restrictive tier—or a could provide the required financial and
more restrictive one. In this regard it is critical that logistical resources required. They could also
decision making is fact-based and data-driven, allow communities to self-police shielding
with a constant focus on safeguarding both lives adherence, including through social pressure
and livelihoods. and community influencing. Based on our
calculations, the cost of shielding would be
Governments can guide efforts in three major
significantly lower than the negative economic
areas to ensure that regions progress towards the
impact of the virus if it is unconstrained.
lowest tier:
— Establish industry-reopening protocols. As
— Scale up testing and tracing. In addition
our colleagues have written, “jobs can be
to testing those with symptoms and their
redefined in ways that make them safer to
contacts, more widespread testing should
restart.”10 Sectors identified as ready to reopen
ideally extend to high-risk groups such as
will need to adopt appropriate safety and
healthcare workers. Moreover, tracing of
physical-distancing protocols, developed in
potential COVID-19 cases would be needed
collaboration with public-health experts and
in each region. This may require rapid training
labor groups; and they will need to leverage
of workers to locate and isolate 100 percent
lessons learned from experiences of reopening
of contacts of confirmed cases, in a way that
in other parts of the world. These protocols
respects individuals’ privacy and safety.
can be used to prioritize where to implement
— Experiment with shielding for high-risk industry-specific public-health measures—
populations. Shielding high-risk populations such as limited hours or employee-testing
amidst broader re-opening can help protect requirements—in order to prevent reinfections
lives. Governments can test and deploy as businesses lift operating restrictions.
different approaches—for example by
Reopening economies in the midst of a pandemic
providing support and incentives for the
will not be a linear, one-time process. Indeed,
affected populations to stay at home, or
economies will require ongoing monitoring and
creating quarantine spaces directly within
management over a prolonged period. The diverse
or adjacent to a community, where high-risk
capabilities required to implement and optimize
groups are relocated temporarily to minimize
economic opening—at all levels of government—
contact with other residents. While shielding
are "muscles" to develop and train, possibly
has not been widely used globally, it could be
over multiple rounds of "lockdown and restart."
a more relevant tool for the African continent.
Governments and society need to adopt this
However, implementation could be particularly
mindset to prepare for the long recovery ahead.11
challenging in a context where vulnerable
9 Finding Africa’s path, op. cit.
10 Andres Cadena et al, How to restart national economies during the coronavirus crisis, McKinsey & Company, April 6, 2020
11 Rajat Gupta and Anu Madgavkar, "The economy must be managed along with covid-19 for a prolonged period," Hindustan Times, May 7,
2020.
8 Reopening and reimagining Africa: How the COVID-19 crisis can catalyze changePart 2: Reimagining positive, sustained, and widely shared among
Africa’s people and institutions. Our research and
Africa interviews suggest three key opportunities to
reimagine African societies:
— Accelerate Africa’s digital transformation
Even as governments and businesses respond
— Put renewed focus on serving the needs of
to the immediate crisis and execute reopening
vulnerable urban populations
strategies, leadership and foresight will also be
required to shape the path to the “next normal”.12 — Transform African healthcare systems with a
The COVID-19 crisis provides impetus to reimagine focus on resilience and equity
fundamental aspects of African societies,
1. Accelerate Africa’s digital transformation
business, and government. In the remainder of this
When the COVID-19 crisis struck, Africa was in the
article, we consider each of these opportunities for
midst of a far-reaching digital transformation. In
reimagination in turn (Exhibit 5).
recent years the continent has seen the world’s
fastest rate of new broadband connections,
Reimagining African society while mobile data traffic was forecast to increase
The COVID-19 crisis is already transforming sevenfold between 2017 and 2022. E-commerce
African societies in profound ways. If governments, has also been growing quickly: online retailers in
business, development partners, and citizens Nigeria, for example, have experienced a doubling
act with renewed purpose and imagination, of revenue each year since 2010.13
they can help ensure that the transformation is
Exhibit 5
Web
Here are 9 bold ideas for reimagining Africa
ExhibitExhibit of
Here are nine bold ideas for reimagining Africa.
Reimagine society Reimagine business Reimagine government
1 Accelerate Africa’s digital
transformation 4 Strengthen sector
competitiveness through 7 Prepare for a more active
government role in the economy
consolidation and innovation
2 Put renewed focus on serving
the needs of vulnerable urban
5 Reshape manufacturing, with a
focus on self-reliance
8 Forge a stronger social contract
between citizens and government
populations
3 Transform African healthcare
systems, with a focus on 6 Catalyze the formalization of
African economies 9 Sustain momentum in regional
and pan-African cooperation
resilience and equity
12 Kevin Sneader and Shubham Singal, Beyond coronavirus: The path to the next normal, McKinsey & Company, March 23, 2020.
13 Acha Leke, Mutsa Chironga and Georges Desvaux, Africa’s Business Revolution, Harvard Business Review Press, 2018.
Reopening and reimagining Africa: How the COVID-19 crisis can catalyze change 9Despite this progress, most sectors of African barriers to e-commerce in Africa.” His views were
societies and economies still lag behind the echoed by Amandine Lobelle, Head of Business
rest of the world in digitization. The COVID-19 Operations at Paystack, who told us: “We are
crisis could be a catalyst to help close that gap, seeing a massive acceleration in digital payments.
accelerating digital transformation in sectors as For many businesses, the only way they will be
diverse as financial services, retail, education, and able to survive is to accept digital payments.”
government (Exhibit 6). In a McKinsey survey of consumers in key African
economies during the crisis, over 30 percent said
Sacha Poignonnec, co-founder and co-CEO at
they were increasing their use of online and mobile
Jumia, remarked that: “A lasting impact of the
banking tools.
crisis could be a change of mentality to transacting
and paying online. This will address one of the
Exhibit 6
Web
Exhibit of
Africa lags behind the world in digitization, but the COVID-19 crisis could
Africa lagstransformation
accelerate behind the world
inincertain
digitization,
sectorsbut the COVID-19 crisis could
accelerate transformation in certain sectors.
MGI Industry Digitization Index (adapted)1
Select sectors2 Digital acceleration in
Africa post-COVID
Digitization Acceleration
Sector Relatively low Relatively high Low High
ICT³
Finance and
insurance
Wholesale trade
Advanced
manufacturing
Real estate
Government n/a
Education n/a
Retail trade
Basic-goods
manufacturing
Healthcare
Construction
Agriculture
US UK Italy India Africa
¹Index is based on assets, usage and labor components, and expert interviews; adapted for inclusion of Africa and comparability.
²Owing
1
to accounting differences, not all sectors can be fairly compared.
Index is based on assets, usage and labor components, and expert interviews; adapted for inclusion of Africa and comparability.
³Information and communication technology.
2 Owing to accounting differences, not all sectors can be fairly compared.
3 Information and communication technology.
10 Reopening and reimagining Africa: How the COVID-19 crisis can catalyze change“Governments need to put
ICT at the center of socio-
economic development”
Lacina Kone,
Director General, Smart Africa
The crisis also could also trigger a digital and technology companies can make sure
transformation in education. Moinina David that data is affordable, while regulators can
Sengeh, Sierra Leone's Minister of Basic and take steps such as allowing banks to accept
Senior Secondary Education, remarked to e-signatures. Ismail Douiri, General Manager
us that the crisis creates “an opportunity to at Attijariwafa Bank, put it to us starkly: “The
fundamentally question everything that we problem is not technology; the problem is the
assumed previously. For example, what are the legal and regulatory environments.”
explicit roles of schools, homes, and communities
— Bring the public sector into the digital age.
in the education of our children?” We heard similar
Governments can step up the provision of
views from Fred Swaniker, founder of the African
digital services and information, and harness
Leadership Group. He told us: “This crisis provides
digital tools to collect, manage, and use data
an opportunity to reimagine education and
to inform decision making. They can also
employment in Africa, but it will take leadership,
enable digitization in society and the economy
courage, and imagination. Those who don't seize
by using the crisis as a spur to accelerate the
this opportunity will be left behind.”
rollout of digital IDs, signatures, and registries.
Businesses, governments, and social-sector Lacina Kone, Director General of Smart Africa,
institutions can act decisively to unlock the told us: “Governments need to put ICT at the
next stage of Africa’s digital transformation. We center of socio-economic development.”
suggest five key priorities:
— Speed up infrastructure investments.
— Expand online presence and broaden digital To support broader digitization, major
offerings. Businesses can move fast to meet infrastructure expansions will be required,
customers’ increased appetite for digital. including those in backbone networks and
For example, insurers can shift to end-to- last-mile connectivity, as well as electricity
end digital customer journeys, using video supply. As Lacina Kone noted: “How digitized
and live chats for customer interaction, while Africa is depends on how digitized our
shifting their claims-submission processes to infrastructure is—it’s not rocket science.” It
mobile. Retailers can also build up their online is estimated that governments, development
presence and develop new logistics solutions. finance institutions, companies, and investors
will need to spend $100 billion on key ICT
— Foster an enabling environment for rapid
infrastructure by 2030 to achieve universal
digitization. Governments can help to ensure
broadband access— including 250,000
that all key enablers are in place to support
new 4G base stations and 250,000 km of
digital adoption. For example, governments
fiber cable.14
14 “Connecting Africa through broadband,” Broadband Commission for Sustainable Development. October 2019, https://www.
broadbandcommission.org/Documents/working-groups/DigitalMoonshotforAfrica_Report.pdf
Reopening and reimagining Africa: How the COVID-19 crisis can catalyze change 11— Scale up digital skills. Africa needs a workforce impossible.15 Moreover, an estimated 65 percent
equipped for the post-COVID “next normal,” of sub-Saharan Africa’s urban population lacks
in which digital skills will be at the core of access to basic sanitation services.16 And a lack of
many occupations. Countries can ensure that electricity and refrigeration in many homes means
training infrastructure is in place for both basic that people cannot store fresh food for
skills, like mobile transactions, and advanced long periods.
ones, such as coding and graphic design.
Kennedy Odede, President and CEO of Shining
2. Put renewed focus on serving the needs of Hope for Communities, encapsulated the
vulnerable urban populations challenge, telling us: “In order to wash your
COVID-19 has laid bare the vulnerabilities of the hands, you need the privilege of water and soap.
250 million people living in Africa's poor urban Social distancing is not possible in slums, and you
communities, often underserved in the context of can’t force people to stay at home when there’s
greater attention and donor focus on rural poverty. no food.”
Decisive intervention is needed to support these
The crisis can spur bold action to serve the needs
communities through this crisis and to improve
of vulnerable urban populations better—not just in
their living conditions in the post-COVID world.
the short term, but also to increase their resilience
Urbanization trends will only deepen the challenge:
against future health and economic shocks.
African cities are expected to double in size over
Governments can work with the private sector
the next 25 years, with two-thirds of that growth
and development partners to focus on three big
forecasted to be in urban slums. Recognizing both
priorities:
the crisis and urbanization trends, Julius Court,
the Country Director of DFID in Kenya, told us that — Scale up delivery of basic services. Apart
"moving the focus of development to include urban from gaps in infrastructure, a lack of access
areas will be a priority for us." to health, education, and waste-management
services increases vulnerability in urban slums.
While restrictions such as lockdowns and curfews
Governments can redouble their efforts to
have helped slow the spread of the virus in
expand access to these basic services, while
many countries, they have also created acute
working with private-sector partners to reduce
economic hardship for a large proportion of the
commuting times, improve connectivity, and
urban poor—most of whose work requires free
increase the availability of business services.
movement. People in urban slums are also more
They can also encourage businesses to deliver
vulnerable to infection from the virus: population
services to a market whose purchasing power
density in slums is more than ten times that of
we estimate at over $150 billion per year.17
other urban areas, making social distancing nearly
2/3
of Africa’s urbanization boom will happen in
urban slums
15 Bird, J., Montebruno, P., & Regan, T. (2017). Life in a slum: understanding living conditions in Nairobi’s slums across time and space.
Oxford Review of Economic Policy, 33(3), 496-520.
16 “People using at least basic sanitation services (urban), WHO/UNICEF Joint Monitoring Programme (JMP) for Water Supply, Sanitation
and Hygiene, World Bank, data.worldbank.org.
17 Adapted from Jacques Bughin, Mutsa Chironga, Georges Desvaux, Tenbite Ermias, Paul Jacobson, Omid Kassiri, Acha Leke, Susan
Lund, Arend van Wamelen, and Yassir Zouaoui, Lions on the Move II: Realizing the potential of Africa’s economies, McKinsey & Company,
September 2016, McKinsey.com.
12 Reopening and reimagining Africa: How the COVID-19 crisis can catalyze change— Leverage mobile data to identify and better pledged significant additional funding for African
serve the vulnerable population. Given health systems.20
the ubiquity of mobile phones in Africa,
Our interviews and research underline the critical
several governments are considering
importance of ensuring that this significant inflow
working with telecom and technology
of health funding is not only used for temporary
companies to share anonymized data on
emergency response, but is also invested in
vulnerable populations’ location, movement,
making African health systems more resilient and
and payments. This could enable them to
equitable for the long term. John Nkengasong,
design better programs and interventions to
Director of the Africa Centres for Disease Control
support these populations’ needs.
and Prevention (Africa CDC), believes that at least
— Strengthen urban infrastructure and planning. $10 billion of the $100 billion that African countries
Governments can accelerate programs to grant are seeking should be invested in health systems
formal recognition to urban settlements that on the continent: “We need to prepare our health
are currently informal. That, in turn, can unlock systems the way we prepare our defenses for war.
greater investment in permanent infrastructure You need an army-like workforce. For example, the
for water and electricity provision. The public, continent needs over 6,000 epidemiologists but
private, and social sectors can also shape we have only 1,500.”
innovative solutions to broaden access to
As Strive Masiyiwa, Executive Chairman of the
housing finance.
Econet Group and one of the African Union's
3. Transform African healthcare systems for COVID-19 Special Envoys, told us: “Africa has an
resilience and equity opportunity to reboot the health sector. There is
The COVID-19 crisis has exposed longstanding an important public component to this, but it's also
fragilities in Africa’s health systems, including gaps a business opportunity. We can rebuild a really
in healthcare personnel, infrastructure, supplies strong sector if we have the right imagination.” We
and equipment, and data systems. In addition to suggest six big priorities in reimagining African
disrupting livelihoods, the response to the crisis healthcare systems:
has also contributed to significant disruption of
— Build enduring systems for outbreak
essential healthcare services; for example, the
prevention and response. The COVID-19 crisis
WHO estimates that the number of malaria deaths
has enabled many countries to identify and
could double this year as a result of COVID-19.18
start creating the elements of an effective local
The pandemic has also exacerbated inequality outbreak response. Governments and African
in healthcare access. Some people can safely institutions can prepare for future outbreaks
quarantine at home, afford PPE and hand by institutionalizing emergency operation
sanitizers, access testing in private labs, or make centers, lab networks, disease surveillance
use of telehealth services, but the majority of rural systems, and emergency supply chains.
and urban poor populations are left with fewer
— Accelerate public-sector investment in primary
options to access health care or practice self-care.
healthcare. Governments can accelerate
In light of these challenges, African governments investment in robust primary healthcare
are likely to double down on their health systems, including at the community level,
investment commitments; In 2001, the Abuja tailored to the needs of rural and urban areas.
declaration set a target for countries to spend 15 This will contribute to early detection and
percent of their annual budgets on health care, but surveillance of future outbreaks, as well as
we estimate that fewer than ten African nations more equitable access to essential health
have approached this level of spending in the past services needed by millions of people who are
decade.19 Development partners have already underserved by healthcare systems today.
18 “WHO urges countries to move quickly to save lives from malaria in sub-Saharan Africa,” World Health Organization press release, April
23, 2020, who.int.
19 Estimate using available data from IMF and WHO, accessed via OurWorldInData.org
20 Finding Africa’s path, op. cit.
Reopening and reimagining Africa: How the COVID-19 crisis can catalyze change 13“We need to prepare our
health systems the way we
prepare our defenses for war”
John Nkengasong,
Director, Africa CDC
Cheikh Oumar Seydi, Director for Africa at the and channel private-sector involvement and
Bill & Melinda Gates Foundation, emphasized investment in priority areas such as
that “The hospital is just a small part of the diagnostic services, pharmaceuticals, and
solution. Primary healthcare facilities are a healthcare facilities.
key component of a strong system. If you do
— Facilitate local manufacturing of critical
this right, people shouldn’t need to go to the
medical supplies. African pharmaceutical
hospital in most situations.”
and manufacturing companies are stepping
— Develop Africa-wide procurement platforms up and innovating to produce critical supplies
and end-to-end supply chains. Pan-African and drugs in the midst of global shortages,
coordination will allow governments to disrupted supply chains, and export bans.
leverage their scale in bulk purchasing and African leaders can decide which production
secure supply of critical equipment and capabilities are essential for the continent’s
medical resources. New crisis-motivated health security going forward and provide
procurement initiatives—such as that of the those industries with the support needed to
Africa CDC—can continue to be leveraged in survive and develop.
a post-COVID world to complement financing
— Invest in digital health ecosystems and
and procurement efforts from multilateral
innovations in service delivery. The crisis has
institutions and donors.
highlighted clear use cases for reaching broad
— Facilitate private-sector investment in sections of the population through digital
healthcare systems. About 45 percent of services. For example, the South African
African health expenditure was financed government is using an interactive WhatsApp
by governments in 2017.21 The majority chatbot to answer common queries on COVID-
was funded by private-sector entities and 19 and has reached over 3.5 million users in five
development partners. This non-governmental different languages.22 Many African healthcare
investment, especially in private care and providers are also accelerating their adoption
support systems, will remain critical for of tools such as telemedicine and remote
addressing the continent’s immense health patient case management.
challenges. Governments can encourage
21 WHO Global Health Expenditure Database, apps.who.int.
22 Emmanuel Paul, “6 amazing African innovations against COVID-19: A cure from physics?” Techpoint Africa, April 2020, techpoint.
africa.
14 Reopening and reimagining Africa: How the COVID-19 crisis can catalyze changeReimagining African business — Strengthen sector competitiveness through
consolidation and innovation
Although the COVID-19 crisis is negatively
impacting the revenue and valuations of — Reshape African manufacturing, with a focus
many African businesses, it is also sparking on self-reliance
extraordinary initiative and innovation as
— Catalyze the formalization of African
companies help ramp up the health-system
economies
response and find new ways to serve the needs
of both consumers and business customers. This 4. Strengthen sector competitiveness through
spirit of entrepreneurship is visible from both consolidation and innovation
large businesses and micro, small and medium- Previous global crises have led to significant
enterprises (MSMEs). Vera Songwe, UN Under market-structure disruptions, with many firms
Secretary General and Executive Secretary going out of business or being acquired. But some
of the Economic Commission for Africa, put it companies have emerged stronger, with crises
this way: “Across the continent we are seeing a spurring them to rethink their business models,
can-do spirit. For example, Ethiopian Airlines customer offers, and corporate structures—and
is repurposing planes to move cargo. Food and to acquire new assets and capabilities. Global
agriculture companies are finding new ways of McKinsey research after the 2008–9 financial
getting customers.” crisis showed that there is a group of companies—
the “Resilients”—that deployed such strategies
We believe that the crisis could prompt
and generated twice the shareholder returns of
fundamental transformation in African business,
their non-resilient peers over the next decade
from the corporate sector through to the informal
(Exhibit 7). 23
sector. Our research and interviews highlighted
three opportunities to reimagine African business:
“M&A from outside the continent
has collapsed. The world's
risk appetite has disappeared.
Unless that changes, any
consolidation will need to
happen within the continent”
Strive Masiyiwa,
Executive Chairman, Econet Group, and African Union COVID-19 Special Envoy
23 “Stronger for longer: How top performers thrive through downturns,” McKinsey podcast with Kevin Laczkowski and Mihir Mysore,
December 20, 2019, McKinsey.com.
Reopening and reimagining Africa: How the COVID-19 crisis can catalyze change 15Exhibit 7
Web
Exhibit of
Resilients generate more value both in the recovery and growth phases
Resilients generate more value both in the recovery and growth phases.
Total return to shareholders,1 %, index (2007 = 100)
CAGR,³ %
350
Resilient2
companies in DOWNTURN RECOVERY GROWTH
Resilients2 12.5
the last crisis
outperformed 300
for the next
decade
250
S&P 500 8.5
200
Nonresilients 5.2
150
100
50
2007 2009 2011 2017
¹Analysis based on 1,140 largest companies by revenue in North America and Europe (excludes financial-institutions groups and real-estate investment trusts).
1 Analysis based on 1,140 largest companies by revenue in North America and Europe (excludes financial-institutions groups and real-estate investment trusts).
²Resilient companies defined as top-quartile total returns to shareholders in their sector through the downturn and recovery.
2 Resilient companies defined as top-quartile total returns to shareholders in their sector through the downturn and recovery.
³Compound annual growth rate.
2 Compound annual growth rate.
The COVID-19 crisis will be highly disruptive to the as they do so, deliver innovations that meet the
business landscape in Africa. Donald Kaberuka, needs of African customers better, while securing
former President of the African Development Bank positive long-term returns for investors. The result
and one of the African Union’s COVID-19 Special could be a stronger and more competitive African
Envoys, remarked to us that "there will be lots business sector.
of bankruptcies worldwide in such industries as
Companies’ pathways to resilience will differ
tourism and related services." In Africa's hard-hit
significantly by industry, however. Our analysis
tourism industry, for example, “many players are
suggests four distinct postures that firms might
not going to survive; people are acknowledging
adopt, depending on the extent to which the crisis
this,” said Mohanjeet Brar, Managing Director of
has disrupted both demand and business models
Gamewatchers Safaris.
in their sectors (Exhibit 8). In sectors that have
Yet the crisis could also see African Resilients faced relatively less disruption, such as agriculture,
emerge in key sectors of the economy—and, the focus will be on sustaining the business or
16 Reopening and reimagining Africa: How the COVID-19 crisis can catalyze changerestoring operations—for example, by simply For example, we are likely to see fewer small
rehiring contract workers as business recovers. airlines in Africa, and possibly the rise of bigger
Sectors such as telecom, which have experienced carriers with broader networks across the
sustained demand but greater disruption to continent. Finally, in sectors that face disruption
their business models, will need to shift their to both demand and business models, entirely
approaches—for example, by putting increased new strategies may be needed. In banking, for
focus on digital service delivery channels. example, we could see the emergence of “digital-
first” operating models as incumbents resize their
In sectors where demand has been hit hard, such
branch networks and acquire smaller companies
as airlines and oil and gas, we are likely to see
with technology capabilities.
restructuring and industry consolidation.
Exhibit 8
Web
Exhibit of
COVID-19 is disrupting sectors across Africa, and businesses can take four
COVID-19
types is disrupting
of action sectors across Africa, and businesses can take four
to be resilient
types of action to be resilient.
Four actions to ensure resilience
HIGH Circle size =
Shift business Banking Shape a sector value
model whole new $10 billion
business
Telecom
Retail:
apparel
Healthcare Hotel and restaurant
Extent of
business- Airlines
model
Agroprocessing
disruption1
Retail: Manufacturing
grocery
Oil and
Agriculture gas
Sustain
business Restructure
and restore company or
operations industry
LOW
Depth and duration of
LOW demand disruption2 HIGH
1
¹Extent of business-model disruption (change in product, economic model, delivery model, production model, supply chain) post-COVID-19.
Extent of business-model disruption (change in product, economic model, delivery model, production model, supply chain) post-COVID-19.
²Extent of negative impact of COVID-19 on the sector measured as estimated reduction in sector value add (over the next 12 months).
2 Extent of negative impact of COVID-19 on the sector measured as estimated reduction in sector value add (over the next 12 months).
Source: African Development Bank; annual reports; IHS Markit; industry expert interviews; McKinsey analysis
Source: African Development Bank; annual reports; IHS Markit; industry expert interviews; McKinsey analysis
Reopening and reimagining Africa: How the COVID-19 crisis can catalyze change 17Whichever scenario companies face, they can and acquisitions. As Strive Masiyiwa remarked
adopt three approaches to emerge from the crisis to us, the crisis provides a unique opportunity
in a stronger competitive position: in this regard: “M&A from outside the continent
has collapsed. The world's risk appetite
— Ramp up operating efficiency. Companies
has disappeared. Unless that changes, any
need to look for ways to reduce cost and
consolidation will need to happen within the
improve productivity—both during the
continent.”
downturn and in the recovery. The past is
prologue: during the 2008–9 crisis, Resilients 5. Reshape manufacturing, with a focus on
reduced their operating costs by more than self-reliance
three times their non-resilient peers, for For African manufacturers, the COVID-19 crisis
example by digitizing their processes and has greatly depressed demand and disrupted
embarking on lean transformations. supply chains. Our Africa-wide economic
impact analysis suggests that the continent’s
— Innovate business models. Companies may
manufacturing sector output will contract by at
need to pivot their product, target-customer,
least 10 percent (more than $50 billion) in 2020
channel, or pricing strategies to adapt to
—with many manufacturers facing much more
changing market conditions. There are
severe outlooks.
compelling examples to draw on in Africa and
around the world. In South Africa, the fintech But the crisis could also lead to a reshaped and
company Yoco is shifting focus from POS more resilient manufacturing sector—after a
payments to online payments and helping difficult recovery—provided that governments
SMEs tap into e-commerce.24 In the United and businesses tackle long-standing barriers
States, restaurant supply companies like Sysco to industrialization and cooperate to seize new
and US Foods have pivoted to serving grocery opportunities. Africa cannot rely on business as
stores.25 In China, a leading brewery deployed usual to come back from the brink.
a social-commerce strategy, recruiting more
In the immediate crisis, African manufacturers
than 40,000 people to serve as "social
across the continent are stepping up to produce
distributors."
essential medical supplies. In economic terms,
— Move boldly on divestitures and acquisitions. the opportunity may contribute just $1-1.5 billion
In past crises, Resilients have been faster than to the continent’s manufacturing output in 2020.
other firms to divest themselves of assets Nevertheless, this is a powerful demonstration
that were no longer core to their businesses, of Africa’s entrepreneurialism and innovative
and bolder in acquiring firms that would help capacity.
them build new capabilities or expand their
In the longer run, African manufacturing can take
footprints in key markets. This is the time
advantage of opportunities in intra-African trade
for African companies to adopt a similarly
and global supply-chain realignments spurred by
aggressive posture on divestitures, mergers
40 cents
As much as
of every dollar of manufactured output in Africa
is imported
24 https://www.heavychef.com/articles/2020/4/23/how-8-african-businesses-have-pivoted-due-to-the-covid-19-pandemic
25 https://www.cnbc.com/2020/03/27/restaurant-suppliers-pivot-to-grocery-direct-sales-during-coronavirus-pandemic.html
18 Reopening and reimagining Africa: How the COVID-19 crisis can catalyze changethe crisis. Ngozi Okonjo-Iweala, former Finance To unlock these opportunities, governments
Minister of Nigeria and one of the African Union’s and private-sector partners can focus on four
COVID-19 Special Envoys, told us: “This crisis has priorities:
shown that globalization may have led us to over-
— Accelerate implementation of the African
rely on global supply chains. There will be a big
Continental Free Trade Area. The crisis
re-think worldwide—not just because of politics,
provides impetus to accelerate intra-African
but also because of countries' ability to meet their
trade that is essential for regional value chains.
basic needs.”
Ibrahim Mayaki, CEO of the African Union
We estimate that, for every dollar of manufactured Development Agency (AUDA-NEPAD), noted
product, Africa imports approximately 40 cents that it is time to move beyond “theory” and
in inputs from outside the continent—higher than into practical implementation. “Manufacturing
most other regions in the world. Over five years, a strategy should be part of our integration
serious push to reduce reliance on global supply agenda, and explicitly framed around strategic
chains could add an initial $10-20 billion to the advantages and priority sectors,” he said.
continent’s manufacturing output if 5 to 10 percent
— Improve ease of doing business across
of imported intermediate goods can be produced
borders. Catalyzing intra-African commerce
within the region. In addition to supply-chain
will also require other enablers of business and
resilience, the shift could also benefit exporters
investment. For example, logistics facilitation is
in countries experiencing devaluation, if they
a key enabler of productivity, and harmonized
could capture the upside of increased export
standards and regulations are required for
attractiveness with less burden of more expensive
trade of products such as pharmaceuticals.
imported inputs. As Vera Songwe reminded us:
Benedict Oramah, President of the African
“The crisis shows us that we need to develop
Export-Import Bank, believes the crisis can
stronger supply chains regionally so we can be
refocus attention on practical implementation,
more competitive globally.”
“including a pan-African payment and
Indeed, strengthening intra-African trade and settlement system to drive local and regional
supply chains could create a springboard for manufacturing.”
export-oriented growth. As companies globally
— Coordinate industrial strategy and policy at the
rethink their supply-chains, Africa could have
regional level. In addition to integration, Africa’s
new export opportunities, particularly to
industrial development requires coordination.
geographically proximate regions. Ismail Douiri
Regional economic communities, with support
told us: "Our value proposition in Morocco would
from governments and development finance
be to convince European corporates that it makes
institutions, can identify and develop industries
sense to diversify their supply chains. For East
around countries’ comparative advantages so
Africa, there could be a similar opportunity serving
that Africa can build truly regional value chains.
countries in the Middle East."
“The crisis shows that we need to
develop stronger supply chains
locally and regionally so we can
be more competitive globally”
Vera Songwe,
UN Under Secretary General and Executive Secretary, Economic Commission for Africa
Reopening and reimagining Africa: How the COVID-19 crisis can catalyze change 19An example is the ECOWAS-led regional Yet the crisis also creates a real opportunity to
healthcare manufacturing strategy, a recent accelerate the formalization of African MSMEs—
initiative in West Africa. and so improve their productivity, access to
finance, and integration into the supply chains
— Explore new industries and product-
of larger businesses and the public sector.
space opportunities. In response to global
Formalization would also create additional
disruptions and greater demand for alternative
protection and opportunities for employees of
sources of manufacturing inputs, private-
MSMEs, and eventually contribute additional
sector entrepreneurialism is needed to
tax revenues for governments. But the task is
identify new manufactured goods that can
mammoth, as only about 15 percent of Africa’s
be competitive regionally and eventually
estimated 90 million MSMEs are registered; the
globally. Opportunities in agro-processing and
barriers include prohibitive costs, bureaucratic
pharmaceuticals may be particularly promising
processes, and a perceived lack of benefit from
in the context of renewed government
formalization.
prioritization of food security and capacity to
produce critical drugs. For formalization to happen at scale, fresh impetus
is needed for MSMEs to register with governments
6. Catalyze the formalization of African
and regulators. As Henry Rithaa, CEO of the
economies
Micro and Small Enterprises Authority in Kenya,
Covid-19 has put the survival of many MSMEs
emphasized to us: “There needs to be sufficient
under threat. And, by our estimates, the
incentive for MSMEs to formalize, both from the
livelihoods of 100 million people working in the
public sector and through connection to larger
informal sector—one-third of the total—are
corporates in the private sector.” The COVID-19
vulnerable due to the crisis.26 The economic
crisis could provide such an incentive: with their
consequences could be devastating. “The
survival in the balance and registration being a
informal economy is the economy in many African
prerequisite for accessing government relief, many
countries,” said Ory Okolloh, former Managing
MSMEs may now see the benefits of entering the
Director of the Omidyar Network and Luminate
formal economy.
Group in Africa, "We can afford the collapse of
one or two large corporates, but not the informal
sector."
The crisis creates a real opportunity
to accelerate the formalization of
African MSMEs – and so improve their
productivity, access to finance, and
integration into the supply chains of
larger businesses and the public sector
26 Finding Africa’s path: op. cit.
20 Reopening and reimagining Africa: How the COVID-19 crisis can catalyze change>$50
billion
funding required over 3 months for Africa's 90
million MSMEs to survive the crisis
There is work to be done in building bridges — Create links between MSMEs and the
between government and the informal sector, corporate sector. Governments can encourage
however. Peter Materu, Chief Program Officer of more small businesses to enter the formal
the MasterCard Foundation, emphasized: economy by generating market access
“The benefit to enterprises cannot just be schemes for MSMEs. For example, they can
temporary, otherwise we will see temporary strengthen government-guaranteed offtake
formalization and then enterprises will disappear schemes and incentivize large companies to
again. We also need to make the registration integrate MSMEs into their supply chains.
process easier.”
— Launch a targeted campaign to formalize
We suggest three key priorities for governments MSMEs. Small enterprises need to be
to focus on in order to draw millions of MSMEs into convinced of the broader benefits of
the formal economy: formalization, notably access to finance,
markets, and labor. Building on the drive
— Channel stimulus funding towards MSMEs.
to formalize MSMEs during the crisis,
Currently, stimulus packages announced by
governments can design compelling packages,
governments that target MSMEs total only
potentially including access to favorable
about $20 billion and, by our analysis, MSMEs
borrowing terms, multi-year tax holidays, and
across the continent could need in excess
capability building. As Brahima Coulibaly,
of $50 billion to survive over just the coming
Director of the Africa Growth Initiative at the
three months. This, combined with the fact that
Brookings Institution, told us: “Africa must
MSMEs contribute between 30 and 40 percent
seize the moment to show that the relationship
of Africa’s GDP, means that governments
between government and small and micro
should channel a greater proportion of funding
firms need not be adversarial.”
to the informal economy.
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