So it seems that the ebola crazy is spreading a lot faster than the virus itself.
And it’s the panic that will do real damage. To quote the Economist:
“The economic costs of epidemics are often out of proportion to their death toll. The outbreak of Severe Acute Respiratory Syndrome (SARS) in 2003 is estimated to have caused over $50 billion-worth of damage to the global economy, despite infecting only about 8,000 people and causing fewer than 800 deaths. That is because panic and confusion can be as disruptive as the disease itself. Studies of past outbreaks have shown that lethal diseases that lack a cure tend to provoke overreactions. This is true even if the risk of transmission is low, as is the case with Ebola.”
I don’t see anyone closing borders to the HIV positive amongst us. Or to those that are dehydrated due to unexpected bowel liquidity.
Nevertheless, it seems that any Port Health authority that has any sort of general proximity to an outbreak is hauling itself out of the back office, erecting barriers in airport lounges, and being generally inquisitive about stamps in your passport. I say this because my passport has seen a lot of latex glove in the last month.
A case in point: Botswana has closed its borders to West Africa and the DRC.
Botswana is in Sub-Saharan Africa and has no borders with any of these countries. In addition, in terms of international flights to and from Gaborone, here is the list of direct destinations/points of origin:
- Lusaka, Zambia
- Harare, Zimbabwe
- Cape Town, South Africa
- Johannesburg, South Africa
- Nairobi, Kenya
If you wanted to fly to Gaborone from anywhere else, you’re going to be catching a connecting flight (probably through Johannesburg).
And even then, I feel like we’ve forgotten that Africa is a giant of a continent. Botswana is over 5,000 km away from Liberia. Here is a list of countries that are geographically closer to Liberia:
- The UK
Here is a graph of the export trade that takes place between Liberia and the rest of the world:
Do you see Botswana on that list? Not even a little bit. And it’s even less present in the graphs for the other affected West African countries. Meaning that any travel between West Africa and Botswana would be incidental, if it happened at all. So what real risk does Botswana face that required it to take such a dramatic step?
But at the same time, I guess you could say “Well what harm is there in it, really? It’s not going to be especially disruptive economically if there’s not much going on between Botswana and West Africa…”
Well, there’s nothing wrong with it, except precedent. Because now that travel ban has extended to the DRC, and anyone coming from the DRC.
The Economic Implications for South Africa
Another graph – only this time, South African export destinations (net exports):
5.51% of net export trade takes place with Zambia. 3.86% of net export trade takes place with the DRC.
Earlier this week, Botswana placed a travel ban on anyone coming from the DRC. Yesterday, reports started coming through of trucks stranded at the Kazungula border between Zambia and Botswana due to the Botswana travel bans. South Africa has put similar bans in place for DRC nationals. And yesterday, the Zambian government introduced screening at the Kasumbalesa border at the DRC.
In some places, the screening process will leave you banned from entering a country if you have a body temperature higher than 37.5º celsius. I mean – we’re talking about equatorial heat here – you can run that kind of fever just because it’s a hot day. You can also give yourself a fever by:
- smoking a cigarette (takes about 20 minutes for your body temperature to return to normal)
- lying (and I’m told that’s not altogether too uncommon at a border post)
- eating anything with chilli or cayenne pepper
- having a cold
Anyway, thanks to an ebola outbreak (of a different strain, no less) in the north of the DRC, and some slight overreaction from the Health Authorities, the borders are starting to congest in the most uncomfortable way.
What this may mean for South Africa:
- Cross-border trade will slow
- That’s 4% of our net export trade (in the DRC)
- And probably a bit more when you consider the congestion that will start to take place at the borders
- This is particularly impactful for any South African mining companies with interests in the cobalt and copper mines in the south of the DRC (see map above).
- As well as for some of the bigger listed transporters. Supergroup springs to mind, after their pretty great 2014 results last week. Especially after their CEO said something along the lines of: ‘New clients in consumer goods and “quite good” commodities cargoes out of Zambia, the Democratic Republic of Congo and Zimbabwe through Durban harbour had boosted the group.’
Shares to short this Thursday?
Just a thought. Particularly if the border closures continue to escalate.
Which they probably will.
Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.
Clare August 31, 2014 at 21:29
I do believe there is some panic with the EVD outbreak. I also side with you that there is some crazy things going on. However, you falter in trying to say that Ebola and HIV are alike, by saying:
“I don’t see anyone closing borders to the HIV positive amongst us. Or to those that are dehydrated due to unexpected bowel liquidity.”
Folks with HIV are unlikely to involuntarily bleed from orifices and (hopefully) are not prone to hiding or not believing health workers.
Good article on the whole thoughReply