(Updates with World Bank, AU comments in 11th paragraph. For more stories on Ebola, EXT7 <GO>)
Dec. 4 (Bloomberg) -- From his office in the Ghanaian coastal city of Tema, Mark Owiredu has an up-close view of how Ebola is ravaging the economies of poorer African nations to the west.
Since the outbreak of the disease was identified nine months ago, Owiredu, the general manager for manufacturing of Ernest Chemists Ltd., has seen orders worth as much as $880,000 annually from Sierra Leone and Liberia all but evaporate. With flights into the worst-affected countries canceled, Ernest, whose products include cough medicines and painkillers, is now looking to larger markets such as Nigeria to fill the gap.
“The business has come almost to a halt,” Owiredu said in a Nov. 5 telephone interview from Tema, about 19 miles east of the capital, Accra. The loss of air cargo routes means shipping by ocean, where delays at the ports can tie up goods, like a recent load sent to Sierra Leone, he said. “The sea route takes too long.”
Owiredu’s woes show how Ebola, a disease with no known cure that has killed more than 6,000 people this year, is stunting business across much of West Africa. As the biggest economies, such as Nigeria and Ghana, keep growing, smaller countries, some emerging from years of military rule or civil war, are losing foreign investment and putting on hold projects to improve basic infrastructure such as power and roads. Ebola may wipe as much as $32 billion from West African economies through 2015, the World Bank said Oct. 8.
Plans Halted
Last month alone, Dangote Cement Plc, Nigeria’s biggest company, delayed a project in Sierra Leone until the crisis abates, while SIC Insurance Co., Ghana’s second-largest insurer, said the company is unlikely to revive plans “anytime soon” to open offices in Liberia and Sierra Leone. Ecobank Transnational Inc., a Togolese lender with operations in 36 African countries, said it halted the opening of two branches in Sierra Leone. UBA Capital Plc, a Lagos-based investment company, will ask shareholders on Dec. 16 to agree on halting some expansion because of health concerns.
“For those companies whose expansion into Ebola economies were to be executed this year, the delay will distort their growth strategy,” Sulemana Mohammed, a financial-research specialist at Ecobank Development Corp. in Accra, said by phone Nov. 11. “These Ebola-hit economies have also been denied the opportunity to attract some foreign investment.”
As some companies pull out, it offers opportunities to others, said Chuka Mordi, executive director of CBO Capital Partners Ltd. The Nigerian investment company is raising $150 million in funding for expansion in West Africa and hasn’t encountered difficulties attracting cash from development- finance institutions in the U.S. and Europe, he said.
Commodity Demand
“It’s a buyer’s market,” Mordi said in an e-mailed response to questions Nov. 18 from Lagos. “Supply exceeds demand, giving purchasers an advantage over sellers in price negotiations. Ebola will not last forever. We expect economic activity there to rebound in 2015.”
The outbreak affected Nestle SA’s business in West Africa, even as the company sees “a responsibility to continue business operations as normally as possible,” Nandu Nandkishore, head of Asia, Africa and Oceania, said in a Nov. 28 interview at the Swiss company’s factory in Agbara, southwest Nigeria.
More than 17,100 people have been infected with Ebola and 6,070 have died, data on the World Health Organization’s website show. The latest outbreak was first reported by the Ministry of Health in Guinea, according to a WHO statement dated March 23. Almost all cases have been concentrated in West Africa, with 1,327 deaths in Guinea, 3,145 in Liberia and 1,583 in Sierra Leone. Six people have died in Mali, the latest country to be affected, according to the WHO.
‘Deeper’ Impact
Senegal and Nigeria were declared free of Ebola in October after a handful of cases. Nine of the 15 members of the Economic Community of West African states, or Ecowas, have had no infections at all. The World Bank is providing $153 million to Guinea to support the fight against Ebola, the lender’s president, Jim Yong Kim, told reporters in Conakry yesterday. The African Union is sending 250 more healthcare workers to the countries to contain the disease, it said in a statement today.
Sierra Leone’s civil war ended in 2002 leaving more than 50,000 dead, and Liberia’s a year later after 250,000 people were killed. Guinea’s military came to power in 2008 after 50 years of rule mainly by two men, prompting violent protests against the army and political leaders. Sierra Leone ranks 183rd out of 187 countries on the United Nations Human Development Index, which measures indicators such as income, literacy and health care. Liberia is 175th and Guinea 179th.
Slowing Growth
“The longer the crisis, the deeper the impact would be on those economies,” Nii Ampa-Sowa, an investment strategist at Accra-based Databank Financial Services Ltd., said by phone Nov. 11. “These countries were just coming out of political strife, and health and other social facilities were not that great before. This will set them back quite a while.”
Trade with the Ecowas nations is dominated by Europe, Asia and the Americas, which tap the region for commodities such as oil, cocoa, iron ore, gold and cotton. In 2013, Ivory Coast was the only West African country among Sierra Leone’s top 15 trading parters, data compiled by Bloomberg show. Ivory Coast and Mauritania were 11th and 15th for Liberia, while Guinea had just Senegal among its top 15.
Growth in Liberia’s $1.95 billion economy will slow to 2.5 percent this year from 8.7 percent in 2013, according to the International Monetary Fund. Sierra Leone’s expansion will weaken to 8 percent from 20 percent last year while Guinea’s will remain at about 2.4 percent, the IMF predicts.
Companies based outside West Africa have also pared back their investment plans. ArcelorMittal, the world’s biggest steelmaker, said in August the proposed expansion of its Nimba mine in Liberia was disrupted after contractors halted work because of the disease. The company will spend $3 million by year-end keeping employees in Liberia free of Ebola, Kleber Silva, head of the iron ore unit, said in October.
In the meantime, Ernest Chemists is still waiting to hear from customers in Liberia. They haven’t ordered supplies since the outbreak started, Owiredu said. And the shipment sent by ocean to Sierra Leone finally arrived about two weeks ago. It had been out at sea for more than three months.
--With assistance from Chris Kay in Lagos.