Ebola Sickens Economies Of West Africa

Sandi Sesay’s boss promised him three months of pay when he told the driver to stop coming to work. The goal was to prevent any possible spread of Ebola at the Sierra Leone mine that employs him.

Two weeks later, Sesay, 29, has yet to see any money from Dawnus Construction Ltd., a contractor at London Mining Plc (LOND)’s Marampa iron-ore deposit.

“I take care of my mother, my sisters and my wife and three children,” he said at a gas station near his home, wearing jeans and a white long-sleeve T-shirt. “How am I going to cope?”

Sesay’s and Sierra Leone’s prospects were bright before the worst-ever outbreak of the virus. The economy was set to grow 14 percent, almost three times faster than the average in sub-Saharan Africa. In Liberia and Guinea, investment in iron ore was luring billions of dollars and fueling growth.

Then the first case of Ebola appeared in December. Initially tagged as a short-term phenomenon with limited impact, the disease now threatens to cripple three economies with a combined gross domestic product of about $13 billion — less than that of Afghanistan.

Commodity companies are slowing production and airlines are shutting routes. In Liberia, the government says the economic impact threatens to derail progress made since the end of the civil war in 2003. Sierra Leone canceled the first sale of bonds open to foreigners last week.

Slowing Down

Sime Darby Bhd, the world’s largest palm oil producer, has slowed production in Liberia, while Sifca SA halted rubber output from its plant there. ArcelorMittal (MT), the world’s biggest steelmaker, postponed expansion plans at its iron-ore mine in northern Liberia because contractors moved some of their workers out of the country. London Mining and African Minerals Ltd., which operate in Sierra Leone, have seen their shares fall.

Richard Evans, a spokesman for Swansea, U.K.-based Dawnus, said this was the first he’d heard of anyone not being paid, adding that a “large number” of non-essential staff had been asked not to come to work while getting basic pay.

Africa’s richest man, Nigerian cement magnate Aliko Dangote, has pulled some employees out of his Liberia cement plant and says 1 percentage point of growth may be shaved off the region that includes Sierra Leone, Liberia and Guinea.

“It will be a great impact,” Dangote said in an Aug. 5 interview with Bloomberg Television. “But various governments are doing things to tackle the situation.”

Staying Home

Liberia has banned public gatherings and told non-essential government workers to stay home. In Sierra Leone, the government sent hundreds of troops to cordon off the hardest-hit areas. Edmond Saidu, the district agriculture officer in Kailahun District, says the disease killed farmers on cocoa and peanut plantations and rice farms, leaving the crops to rot. Liberia also has closed off afflicted regions.

The Liberian government is even planning to close open-air markets, a measure that will probably push up prices in the capital. At the crowded Duala market in central Monrovia, 17-year-old food seller Mary Kolubah said business had slowed. The wholesale shop where she obtains bags of rice in order to resell them in smaller, paper-wrapped quantities raised prices 10 percent in just a few days, she said.

Nearby, meat seller Amadu Bah, 46, sat idle at his empty stall. Cattle traders have stopped importing cows from Guinea and Sierra Leone because the beasts must cross through infected areas, he said: “I’m out of business now because selling cow meat is the only thing I’ve known since I was 25 years old.”

Body Bags

Distrust of government in the three countries runs so deep that officials are still struggling to convince citizens that Ebola exists and isn’t a hoax. The virus exposed limitations of the health care systems that include a scarcity of doctors and thermometers, a shortage of body bags that prevents burials and medical workers neglecting basic hygiene such as hand washing.

The official tally of deaths may underestimate how much the disease has spread, the UN’s health agency said last week. More than 1,200 people have died in the three countries and five have succumbed in Nigeria. The government in Africa’s largest economy has so far managed to avoid a wider outbreak.

The disease struck just as the three smaller countries were starting to bounce back from a past of violence and instability. Liberia is recovering from a civil war that spilled into its neighbor Sierra Leone during the 1990s, leaving both economies ruined. In 2010, Guinea, the world’s biggest bauxite exporter, held its first democratic elections since independence following decades of erratic military rule.

Moving West

Isolating the affected areas in Sierra Leone has made it almost impossible to get food to the capitals. The UN’s food aid agency says it will need to feed 5 percent of the population of the three countries in the coming months.

The past few months mark the first time the disease, identified in 1976 near the Ebola River in what is now the Democratic Republic of Congo, has killed anyone in west Africa. The virus lives naturally in fruit bats and other wild animals. Humans get it from the animal’s secretions and pass it on to other humans through contact with bodily fluids.

The outbreak is isolating the countries, even if the UN health agency says air travel is an unlikely major transmission point. Nigeria’s Arik Air suspended flights to Liberia and Sierra Leone after a Liberian man traveled by plane to Lagos and infected at least eight others with the disease after he collapsed at the airport.

British Airways Plc and Kenya Air Lines also halted routes to Liberia and Sierra Leone, while Gulf carrier Emirates scrapped flights to Guinea. Korean Air Lines (003490) on Aug. 14 canceled flights to Kenya’s capital of Nairobi, a regional hub located thousands of miles away from West Africa.

Rising Prices

“It’s not just that international flights are canceled and movement of people is restricted because of the quarantine measures,” said political analyst Lansana Gberie. “There’s also a disabling psychological atmosphere that isn’t conducive to productivity.”

Sierra Leone, Guinea and Liberia will need about six more months to turn the outbreak around, according to Doctors Without Borders. By then, the effects of the health emergency will have spread further, into oil prices — the three countries import all their oil — food costs and lost iron-ore production.

Residents of the hilly streets overlooking the Gulf of Guinea in Freetown, Sierra Leone’s capital, spend their days at home, worrying about rising food and fuel prices, despite government promises to crack down on price-gouging opportunists. Checkpoints manned by military remind residents of a 1999 assault by rebels that left thousands dead.

Fatmata Edna Njai, a 35-year-old hotel receptionist, said she was dumbfounded when her employer handed her an envelope with the equivalent of a third of her monthly salary two weeks ago and told her to stay away until Ebola is contained. The hotel wasn’t getting any customers, and Fatmata was told she hasn’t lost her job.

She now stays with her son, parents and three relatives inside their apartment most of the day, and says she’s run out of money. “I’m praying and fasting so that God will provide me a job,” she said.

Source : Reuters