Review of Agricultural and Applied Economics (Mar 2021)
CONSEQUENCES OF COVID-19 ON DIGITAL ECONOMY IN THE HORN OF AFRICA
Abstract
Research background: The Horn of Africa is arguably the most vulnerable region for many shocks. Currently, the coronavirus disease-2019 (COVID-19) is spreading fast in the region. The number of new cases and the mortality of this pandemic have increased dramatically. As lockdown and movement restrictions are the major strategies suggested to minimize the spread of the virus, the impacts of the COVID-19 pandemic are not only limited to public health but also have a major impact on the economic aspects. Purpose of the article: This review paper aims to synthesize the consequences of COVID-19 on the digital economy in the Horn of Africa. We review and recommend adopting the digital economy could be the remedy to go through COVID-19 safely as the world sees digital companies boom during the pandemic. Methods: To achieve our purpose, we applied qualitative analysis and synthesis as a method, and recently published papers in the area (most suitable to our aim) are included as data sources. Findings & Value added: The Horn region is already feeling the economic impact of the virus and we discussed it in terms of monetary, fiscal, current account balance, and unemployment expected impacts. However, this pandemic is not just about adverse impacts; it is also about unanticipated business opportunities. In this perspective, the decline of the international oil price during this pandemic can be seen as a blessing in disguise since countries in the region are net importers of crude oil. Moreover, Ethiopia’s coffee export has increased rapidly at a level of record sales of about 665 million dollars from July 2019 to April 2020 (10 months’ export). The lion’s share of this upsurge has been achieved because of the rise in the coffee consumption from homes of the country’s Arabic coffee importers, such as Germany, the U.S, and Saudi Arabia due to the lockdown measures. The paper also covers the prospects of the virus by pinpointing various booming companies that are digital-based businesses. Therefore, we urge the Horn of African countries to internalize these opportunities by swiftly investing in the telecom sector to shift to the online way of doing business.
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