MSc International Accounting and Finance

International Trade & Competition Module

Course Work – Impact of Ebola

The impact of the outbreak and spread of the Ebola virus,

specifically potential and actual adverse consequences on
international trade and business.

Student ID – 21500189
Submitted: September 26, 2015
Contents

1.0 Introduction ..................................................................................................................................... 2

2.0 International Trade and Business Prior to Ebola outbreak ..................................................... 3

3.0 Impact of Ebola Outbreak on International Trade and Business ........................................... 6

4.0 Conclusion ...................................................................................................................................... 9

References .......................................................................................................................................... 10

1.0 Introduction

Ebola is a virus disease which leads to a severe, often fatal illness in humans if untreated.
The Ebola virus disease (EVD) first appeared in 1976 in two simultaneous outbreaks in
remote villages in Central Africa. The first outbreak occurred in Nzara, Sudan, and the other
in Yambuku, Democratic Republic of Congo. The latter occurred in a village near the Ebola
River, from which the disease takes its name. The virus is transmitted to people from wild
animals such as chimpanzees, gorillas, fruit bats, monkeys, forest antelope and porcupines
found ill or dead or in the rainforest. It spreads in the human population through human-to-
human transmission, by means of close contact with the blood, secretions, organs or other
bodily fluids of an infected person whether dead or alive. It can be difficult to distinguish EVD
from other infectious diseases such as malaria, typhoid fever and meningitis as they have
similar symptoms. This includes the sudden onset of fever, fatigue, muscle pain, headache
and sore throat. This is followed in the case of EVD by vomiting, diarrhoea, rash, symptoms
of impaired kidney and liver function, and in some cases, both internal and external bleeding.
The time period from infection with the virus to onset of symptoms is between two to twenty
one days (World Health Organisation (WHO) fact sheets on EVD, August 2015).

According to the WHO, the first cases of EVD in the West Africa outbreak were noticed in
March 2014. The current outbreak in West Africa is the largest and most complex Ebola
outbreak since the Ebola virus was first discovered in 1976. On August 8, 2014, the WHO
Director-General declared the West Africa outbreak a Public Health Emergency of
International Concern under the International Health Regulations (2005). The most severely
affected countries in the recent EVD outbreak are; Guinea, Liberia and Sierra Leone. All

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these countries have very weak health systems, lack human and infrastructural resources,
and have only recently emerged from long periods of conflict and instability, which have
exacerbated the situation. The outbreak has also spread between countries in and outside of
West Africa, starting in Guinea then spreading across land borders to Sierra Leone and
Liberia, by air (1 traveller) to Nigeria and USA (1 traveller), and by land to Senegal (1
traveller) and Mali (2 travellers). Since then, there have been more cases and deaths in this
outbreak than all others combined. As at September 22, 2015, for only the most severely
affected countries, 28,295 cases have been reported out of which 11,295 persons have
died. The average EVD case fatality rate is around 50%. Case fatality rates have varied from
25% to 90% in past outbreaks (WHO Situation Summary Report, September 22, 2015).

With regards to EVD treatment, early supportive care with rehydration, symptomatic
treatment improves survival of affected victims. Community engagement, good case
management, surveillance and contact tracing, a good laboratory service, safe burials and
social mobilisation has remain so far the key to successfully controlling outbreaks. This is
because there is as yet no licensed treatment proven to neutralise the virus and neither is
there a licensed Ebola vaccine. However a range of blood, immunological and drug
therapies are under development with two potential vaccines undergoing evaluation.

Currently as at September 2015, all affected countries have been declared Ebola free, with
no new cases recorded. This was without an initial one-case set back in Liberia in early June
2015 during the 90 day surveillance period. Liberia and the other severely affected countries’
ability to effectively respond to the outbreak are due to intensified vigilance and rapid
response by their governments and multiple partners in the international community. The
EVD outbreak has had adverse consequences on international trade and business, not only
for the three most affected countries but the entire West Africa region and the international
community as a whole. This paper seeks to unravel the impact both actual and potential of
the Ebola outbreak specifically on international trade and business.

2.0 International Trade and Business Pre and Post Ebola

The Ebola virus has not only been a public health emergency of international concern, but
has also remained a threat to international peace and security, trade and business. Gostin
and Friedman (2015) argue that the devastating consequence on the three worst affected
countries has been incalculable, not just in human lives lost but in terms of the social
dislocation and economic impacts. To know the exact extent of the impact of the Ebola

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outbreak on international trade and business, there needs to be a relook at the situation
before and after the outbreak, especially for the worse affected countries (Guinea, Liberia
and Sierra Leone), the sub region, West Africa and Sub-Saharan Africa as a whole.

There cannot be a mention of trade and business in West Africa without the mention of
ECOWAS. ECOWAS is the Economic Community of West Africa States, which is a 15-
member regional group established as a trading union in May 28, 1975 with a mandate of
promoting economic integration in all fields of activity of member countries. Unfortunately
according to the Committee for Development Policy (CDP) of the UN Economic and Social
Council (ECOSOC), (2015), all ECOWAS members are Least Developed Countries (LDC)1
with the exceptions of 4 members; Cape Verde, Nigeria, Ghana, and Cote D’voire. This
means that the worst affected EVD countries were not any better off in terms of income
levels and socio economic development indicators before the advent of the Ebola outbreak,
but have they their situation worsen thereon?

Using the trade indicators with respect to annual percent growth for export of goods and
services (one of the fifth pillar on trade outcomes of the world trade indicators), one can
ascertain the situation prior/post EVD with regards to trade in the worst affected countries.
These countries have almost similar exports commodities gained through the mining
industries (mainly iron and aluminium ore) which are the major income earners for their
economies, except for Liberia which has rubber as the largest export earner in addition to
the iron ore.

From figure 1, it is seen that in Sierra Leone, all was not that gloomy, as their prospects of
leaving the LDC is attainable if some consistency of increased growth was maintained.
There was some exponential growth in 2012 in exports of goods and services which saw a
sudden near decline, but was comparatively better than all the two countries including trends
in sub-Saharan Africa which remains in totality a reflection of the state of exports from the
continent. It is predominantly an import driven economy in international trade.

1
A Least Developed Country (LDC) is a country that, according to the CPD of ECOSOC, is a low-income country
confronting severe structural impediments to sustainable development and exhibits the lowest indicators of
socioeconomic development, with the lowest Human Development Index ratings of all countries in the world

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 Figure 1: Exports of goods and services (annual % growth)
160.0

120.0

80.0

40.0

0.0
2008 2009 2010 2011 2012 2013 2014
-40.0

Guinea Liberia Sierra Leone Sub-Saharan Africa

Source: Author’s analysis based on World Development Indicators Data

The decline in exports for Sierra Leone is evidenced in the declining economic growth
measured in GDP annual percentage in the ensuing periods as seen in Figure 2. Regrettably
this trend is estimated to end the 2015 year and forecasted to continue into the subsequent
2016 and 2017 years. This outlook projects a rather bleak situation of the continuing impact
of the Ebola outbreak on trade and business and its effects on slowing the economic growth
of the countries involved. Though the trends in Figure 2 show that, recovery may come for
resilient economies such as Sierra Leone with a potential rise in growth once more; the
others maintain a steady rate of recovery.

Figure 2: GDP Growth (Annual %)

25.0
20.0
15.0
10.0
5.0
0.0
2008 2009 2010 2011 2012 2013 2014 2015e 2016f 2017f
-5.0
-10.0
-15.0
Liberia [LBR] Guinea [GIN] Sierra Leone [SLE] Sub-Saharan Africa [SST]

Source: Author’s analysis based on World Bank Global Economic Prospects Data

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The World Bank economic analysis of Sierra Leone in the Sierra Leone’s Country Policy and
Institutional Assessment (CPIA) updated July 2015, blames the country’s GDP growth
decline to “three developments within this period: high expenditure on tackling Ebola, a
remarkable slowdown of economic activities due to Ebola, and a significant lowering of
mining revenue due to suspension of iron ore mining”. They expect the situation, as shown
in the figure 2 to ease in 2016 as the effects of Ebola and of the suspension of mining
activities in the country continue towards the end of 2015 until the recovery from Ebola gains
grounds. The Bank asserts that “Before the outbreak of Ebola, GDP growth in 2014
remained linked to iron ore export, as international iron ore price (of about US$100/ton)
started to fall,” hinting that Ebola is not only the cause of the decline of growth.

The situation is quite similar but dire in Liberia as per the World Bank’s Economic outlook
analysis. The World Bank says that, “Liberia’s near and medium-term economic prospects
have been severely adversely affected by the Ebola crisis through its impact on all sectors”
Though in the absence of Ebola, the country was experiencing slow growth from 2013 to
2014, certainly the epidemic had only worsened the situation. Its major exports, rubber and
iron ore has also seen a downsizing which is partly due to low falling prices and the
reduction in production levels due to the Ebola outbreak.

Guinea’s situation is not any different and was rather similar to Liberia. Again the World
Bank’s analysis of the situation in Guinea is that “Guinea’s medium-term potential remains
encouraging; however growth is projected to remain well below the levels initially anticipated
before the Ebola outbreak for the coming years. In 2013-14, real GDP growth rates were
projected around 5%, accelerating sharply to close to 20% in 2015-16 following the start of
the major Simandou iron ore project.” The Bank asserts that, as a result of the drop in mining
investment and political unrest, growth dropped to a level slightly negative in per capita
terms in 2013. The Ebola epidemic further aggravated the situation as evident in dip in
growth in 2014 to 2015 but is forecasted to rise marginally, see figure 2.

3.0 Impact of Ebola Outbreak on International Trade and Business

According to the WHO Strategic Response Plan for West Africa Ebola Outbreak (2015), this
is the largest emergency operation WHO has ever undertaken. It has currently deployed
over 700 staff to all vicinities across the three worst affected countries. This is to ensure a
coherent and effective operation in order to curtail the outbreak across the affected
countries, WHO collaborated closely with the UN Mission for Ebola Emergency Response

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(UNMEER) and other UN agency partners, especially UNICEF, WFP, OCHA, UNFPA,
UNAIDS and UNDP. This collaborative efforts was not without the support of International
NGOs and other Governmental Institutions such as the African Union, US Centre for
Disease Control (CDC), Médecins Sans Frontières (MSF), the International Federation of the
Red Cross (IFRC), the International Organization for Migration (IOM), the Global Outbreak
Alert and Response Network (GOARN), International Medical Corps (IMC), Save the
Children, Alliance for International Medical Action (ALIMA), International Rescue Committee
(IRC), American Refugee Committee (ARC), and the Emergency and Partners in Health
(PIH). Governments across the globe such as the United Kingdom, China, Norway, Sweden,
Denmark, Australia, New Zealand, Korea, the United States of America, France, Germany
and many others were not left out in lending their support, both in kind and cash.

The World Bank actually tracks Ebola resource flows from these governments including
Regional Organisations, International Financial Institutions and Foundations. As at
September 16, 2015, a total of US$7.9 billion pledges (including monetized in-kind
contributions where available) have been directed at controlling the outbreak. World Bank
Global Ebola Response Tracking (September 2015). This high level partnership and
collaboration among varied stakeholders shows unprecedented nature of the West Africa
Ebola outbreak in its scale, severity, and complexity not just for the counties involved but
globally. All these direct resources, without counting just yet the economic losses of the
outbreak represent forgone investments in other productive sectors of the donor countries
and the affected countries. The World Bank estimates that the worst affected countries will
lose at least US$1.6 billion in forgone economic growth in 2015 and US$6 billion for Sub
Saharan Africa as a result of the epidemic (World Bank Press Release, January 1, 2015).
This confirms the GDP estimated growth decline for the affected countries in figure 2.
However it is a huge reduction in initial fears by the World Bank Group economic analysis on
October 8, 2014 that said that West African alone could lose economic growth up to US$25
billion. Such fears still remain a relevant prospect due to the erosion of consumer and
investor confidence and the disruptions to travel and cross-border trade in the sub region,
unless mechanism are put in place to restore such needed confidence in the region.

Counting the actual disbursement for the period 1 September 2014 to 31 May 2015 is at
US$ 4.6 billion according to the UNMEER Resources for Results IV Paper (August 2015).
Figure 3 below gives a clearer picture of the cost of the Ebola outbreak for the period
September 2014 to May 2015. So far pledges redeemed from governments represents 67%
(US$3.1b) of total disbursements, while the country that received the most of this funding is

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Liberia representing 37% (US$1.4b), followed closely by other EVD countries accounting for
28% (US$1.3b) of total disbursements.

Figure 3: Disbursements by country and contributing partner (US$ millions)

International
Regional Financial
Governments Organisations Institutions Foundations Totals
Guinea 242.56 39.54 282.88 11.14 576.12
Liberia 1,024.70 77.57 298.63 26.03 1,426.93
Sierra Leone 618.94 30.09 243.64 28.18 920.85
Other EVD Countries 951.60 269.89 0.00 64.74 1,286.22
Other 41.19 0.00 0.00 3.22 44.42
Unspecified 187.99 0.00 115.00 0.00 302.99
Total 3,066.98 417.09 940.15 133.31 4,557.54
Source: UNMEER Resources for Results IV Paper (August 2015)

The fall in production levels due to the Ebola outbreak in the predominantly mining sector
and the rubber industry in Liberia has reduced not only government revenues but the
disposal income of households who are engaged in employment in these sectors. The trade
and movement restrictions put in place to curtail the spread of the virus have also
contributed to the fall in production, restricted the transport sector and has limited trade in
and outside the country even across borders of these three countries. For instance, Adegun
(2014) cites an instance where Bangkok Thailand exporters say they were unable to ship
much of their rice produce to African ports, most especially in the affected countries because
individuals were unwilling to man the vessels due to the fear of contracting the Ebola virus.
This has negatively affected the income of farmers for importers but also had a ripple effect
of food insecurity and price escalation of goods desperately needed in affected countries. It
actually took the UN Security Council to pass an unprecedented resolution naming Ebola a
threat to international peace and security and urging an escalated response and an end to
travel restrictions, which encouraged several states to enact and adhere to the resolution.
(UN Security Council Resolution 2177, September 2014)

Lost in human resources especially health workers remained at 520 as at September 23,
2015 (WHO Situation Report, September 2015). This worsens the already precarious
situation as warned by Gostin and Friedman (2015) is woefully below the expected WHO
and International Labour Organisation (ILO) standards. They say the Ebola worst affected
countries have about 20 percent to less than 10 percent of the ILO and WHO

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commendations. International recommended thresholds for doctors, nurses, and midwives
range from 223 (WHO) to 345 (ILO) per 100 000 population. It was not just the health sector
that suffered from the death tolls, these lost lives represented lost labour which will otherwise
tend the farms, man schools, and support the mining sector to grow the economy.

4.0 Conclusion

The Ebola epidemic is an unprecedented public health emergency of international concern,

and while encouraging progress has been made in controlling it, it leaves in its wake a huge
distraction to the economies of the affected countries due to the adverse impact it has had
on international trade and business.

The importance of trade in our world today cannot be overemphasized. It is practically the
backbone of every economy because trade can help boost development and reduce poverty.
It does so by generating growth through increased commercial opportunities and investment,
as well as broadening the productive base through private sector development. Trade also
among other raison d'être encourages innovation, improvement in standards and quality,
enhances competitiveness, facilitates export diversification, expands choices and lower
prices, reduces government spending, creates employment opportunities but more
importantly strengthens ties between nations by bringing people together in peaceful and
mutually beneficial exchanges and this contributes to peace and stability and improved
livelihoods.

Most of these benefits of trade were loss during the outbreak and some will largely take a
longer period to restore. These lost benefits of trade remains among the greatest impact of
the outbreak on international trade and business among others. However the huge mortality
losses would remain irreplaceable and it will leave an indelible scar that will linger on in the
affected countries for a long time to come.

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References

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[online] Academia.edu Available at
https://www.academia.edu/8391695/Impact_of_Ebola_on_West_African_Economies_throug
h_the_trade_channel [Accessed 25 Sep. 2015].

Bank, T. (2014). The economic impact of the 2014 Ebola epidemic: short and medium term
estimates for Guinea, Liberia, and Sierra Leone. [online] Documents.worldbank.org.
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impact-2014-ebola-epidemic-short-medium-term-estimates-guinea-liberia-sierra-leone
[Accessed 25 Sep. 2015].

Global Ebola Response, (2015). SITUATION REPORT (22 Sept. 2015): Week of 7 - 20
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Who.int, (2015). WHO | WHO strategic response plan 2015: West Africa Ebola outbreak.
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Worldbank.org, (2015). Ebola: Most African Countries Avoid Major Economic Loss but
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[Accessed 23 Sep. 2015].

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