Agriculture is one of the sectors that have been upended by the coronavirus pandemic globally. The sector in Africa is however going to be driver for recovery if it can attract enough investment./Photo by Whitney Curtis

Editor’s note: this article is part of the “Covid-19 Reset” project, where the LéO Africa Institute is asking its fellows and associates to imagine a new, progressive post-covid world for our respective communities and countries.


The coronavirus has exposed how industries and nations were ill-prepared for major disruptions, including a pandemic.

While the 2008 recession was over a decade ago, there are multiple reasons as to why this health pandemic has easily caused a recession. During the improved economic times after the 2008 recession, institutions should have saved money, governments should have increased taxes, invested in critical infrastructure and limited spending to prepare for the next recession.

Several stimulus packages being offered by some governments have helped keep afloat some critical industries such as airlines and tourism, however, while these businesses are likely to survive and a fair number of jobs saved; all will soon change after the pandemic ends.

To put it simply, during the pandemic an institution gets money from a government to sustain its business, this will only be available until the pandemic is over and after the business will be expected to sustain itself without further help. Given expected market behavior, people will likely stay away from engaging in hitherto “normal” activities such as going to malls, restaurants, and gyms, and thus the businesses will still face the effects of the pandemic and be forced to cut down on employees and possibly shut down.

From this point of view, it is hard to justify giving all businesses huge sums of public money only for them to end up shutting down. From a moral perspective, a government should stand up for populations and businesses that create jobs for its citizens.

Governments such as the United States have already set up agreements that financially bailout businesses in times of an economic recession such as what is being faced due to the novel coronavirus. It could be argued that this approach runs the risk of moral hazard with firms selfishly not saving enough of their own money to stay afloat during times of turmoil since they anticipate a bailout, but then again the bigger risk of losing companies that decide to shutdown factories or move elsewhere will cause more long term issues due to high unemployment rates and less future revenue for the government.

What are the industries that are likely to thrive post-COVID?

Covid-19 is right now a global emergency and the healthcare system globally is being called upon to save lives. At some point in the future, the coronavirus will not be an emergency anymore, but patients may still have to go to healthcare facilities for monitoring and check-ups or vaccination related to the disease. The health care sector will also benefit from increased funding for research for the coronavirus and other likely pandemics.

Businesses offering sanitation products and services will continue to thrive since the new normal will have people wearing masks and using sanitizers and gloves more regularly. Likely to thrive also are companies that can offer thorough cleaning and disinfection services for homes, offices, and public places like restaurants, as new sanitation measures by governments, take effect.

The food industry, including agriculture, has no doubt been upended by Covid19. The coronavirus has distorted food distribution chains and it is likely to up the cost of food locally and on the global market. While Africa will still export food to the rest of the world, the anticipated high cost of air travel will require innovation in how to reduce perishability while maintaining food standards. As a result, the sector will see increased investment inflow.

The insurance industry is also predicted to benefit from a post-covid19 reopening because insurance premiums will go up to allow cover for Covid19 symptoms.

What industries will struggle?

The sectors likely to suffer in the short and medium-term include tourism, the airline industry, commercial real estate, and public spaces like restaurants.

With people adapting to working from home, employers realizing that employees can be productive, and with social distancing practice still a norm, companies will realize they do not need huge office space.

International tourism will be affected due to travel-phobia and will take time to get back to normal. However, local tourism is likely to pick up once lockdown eases and people will be keen to get out of their homes. Still, personal hygiene and safety standards will need to be maintained by establishments, and this is likely to be enforced by new, stringent public health safety measures by governments and local authorities.

During the Covid19 period, the risk of default on loans is high as many businesses and individuals were caught unawares by the pandemic. Post-Covid19, the priority for most businesses and individuals will be servicing debt, and not investment capital to expand. As a result, lending institutions will be wary of new debtors and terms of borrowing may be difficult for most SMEs to meet.

What are those businesses you as an investment advisor will be keen to attract investment into?

Covid19 has accelerated the Fourth Industrial Revolution and, going forward, people will appreciate and use technology more. Technologies that limit human contact and still enhance efficiency will be attractive investment opportunities, for example, robots to monitor temperature and sanitizing stations at public spaces, cargo delivery systems, etc.

Gaming is another major industry likely to grow due to an increased need for various home entertainment options.

The pandemic has reignited interest in the use of data by governments to more readily track the spread of diseases.  A good example is China and how they were able to contain the spread of the pandemic in Wuhan using mobile tracking systems to trace infected patients.

However, due to the lack of proper physical addressing systems and information on citizens’ locations, governments in Africa will increasingly find it difficult to extend welfare assistance to those who need it the most and will be forced to invest in data fixes to the problem. Governments will likely pursue public-private partnerships with technology and data firms to extend some of their expertise and service in alleviating this paucity of useful citizen data.

Digital learning platforms that are accessible to underserved students without access to computers and little or no access to internet connectivity are also primed to attract a lot of investor interest. In Kenya, private and higher learning institutions have somewhat adapted to virtual learning but the majority of public primary schools haven’t, which will likely increase learning inequalities among the nation’s poor unless the government intervenes.

Services related to Mental Health, counseling, and business coaching will also thrive as people seek help to deal with the effects of the crisis.

Lastly, as a business investment advisor, our industry will likely have to change the way we assess investment readiness in the world beyond Covid19. As a result of the pandemic, the purpose of business and capitalism is being questioned. In the US we have seen larger companies seeking bailout funds from the government, yet they should have better financial reserves than smaller companies that are more deserving of the support.

You would expect that a company that has been operating for more than 50 years should not collapse following a one-year pandemic. In the future, whether businesses can be supported to become more sustainable long-term and their ability to withstand shocks will be a key concern for investors. Investors will take a more long-term view of their investments as they support their investee companies to build sufficient reserves to cushion them during economic downturns.

The general feeling among investors is they have a role to play in ensuring the companies they invest in contribute to building a more sustainable and inclusive economy, however, for this to happen business models will have to change.

Previously the high impact sectors considered were sectors like agriculture, healthcare, and education. “Impact” now needs to be seen through a wider lens, one that focuses on a shift to more productive sectors where the informal urban population (urban, low-skilled workers) is employed. These are the most vulnerable workers during this pandemic since, with lockdown restrictions, they are not able to manufacture and sell their wares in open-air markets or hawk them around. Impact investors should work towards formalizing the urban informal sectors of the economy and ensure that they also get access to finance.

Liz Muange is the Investment and Value Chain Lead for the Sustainable Urban Economic Development Programme, a UKAid funded 5-year £70 million programme. She is also a 2017 Young and Emerging Leaders Project fellow of the LéO Africa Institute

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