This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Ebola Starting to Take an Economic Toll in Africa

By Paul Wiseman 

WASHINGTON — Caterpillar (CAT) has evacuated a handful of employees from Liberia. Canadian Overseas Petroleum Ltd. (XOP) has suspended a drilling project. British Airways (IAG) has canceled flights to the region. ExxonMobil  (XOM) and Chevron  (CVX) are waiting to see whether health officials can contain the danger.

The Ebola outbreak, which has claimed nearly 1,000 lives, is disrupting business and inflicting economic damage in the three African countries at the center of the crisis: Guinea, Sierra Leone and Liberia. So far, analysts say the crisis doesn't threaten the broader African or global economies.

"We must make sure it is controlled and contained as quickly as possible," said Olusegun Aganga, trade minister in Nigeria, which has confirmed nine cases of Ebola. "Once that is done, I don't think it will have a lasting impact on the economy."

The World Health Organization on Friday declared the outbreak an international public health emergency. The WHO didn't recommend any travel or trade bans. But it cautioned anyone who had had close contact with Ebola patients to avoid international travel and urged exit screenings at international airports and border crossings.

"When you have a widespread outbreak of Ebola, you can end up with a panic," said John Campbell, senior fellow for Africa studies at the Council on Foreign Relations. "People won't go to work. Expatriates will leave. Economic activity will slow. Fields won't get planted."

The World Bank estimates that the outbreak will shrink economic growth in Guinea, where the crisis emerged in March, from 4.5 percent to 3.5 percent this year.

Ama Egyaba Baidu-Forson, an economist at IHS Global Insight who focuses on sub-Saharan Africa, is cutting her forecasts for growth this year in Liberia and Sierra Leone. She warned that prices would rise as food and other staples become scarce and that the region's already fragile governments would run up big budget deficits in fighting Ebola.

Baidu-Forson says the countries hit by Ebola ultimately could require financial help from the International Monetary Fund.

In the meantime, multinational companies that do business in the resource-rich region are scrambling to respond to the crisis. Among them:

— Heavy equipment manufacturer Caterpillar Inc., based in Peoria, Illinois, has "evacuated less than 10 people" from Liberia, company spokeswoman Barbara Cox said by email. In a statement, Caterpillar said: "The health and safety of our people is our top priority. ... We will continue to monitor the situation closely."

— British Airways has announced that it's suspending flights to and from Liberia and Sierra Leone through Aug. 31 "due to the deteriorating public health situation in both countries."

Tawana Resources, an Australian iron-ore company, said it had suspended "all non-essential field activities within Liberia" and sent all non-essential African workers, expatriates and contractors home.

— London-based mining company African Minerals has begun imposing health checks and travel restrictions on employees in the region.

— Canadian Overseas Petroleum, based in Calgary, has stopped drilling in Liberia. And some of its expatriate employees have left the country.

— ExxonMobil said in a statement that its offices remain open and that "we're taking precautions to ensure the health and safety of our employees." The company has offices in Liberia, Nigeria and several other African nations.

— Chevron, which has an office in the Liberian capital of Monrovia and is in the process of exploring for oil off Liberia's coast, said it's "closely monitoring the outbreak of Ebola virus in West Africa." But the company wouldn't say whether it was withdrawing any employees or taking any other steps as a result of the outbreak.

So far, the economic damage has not affected West Africa's biggest economy, Nigeria's, though the disease has already spread to that country.

"It's not stopped commerce; it's not stopped buying," said Danladi Verheijen, managing director of the investment firm Verod Capital. "The flights are still full going into Nigeria."

Timi Austen-Peters, chairman of the Nigerian engineering and manufacturing firm Dorman Long, met in Washington on Friday with investors who were interested in Africa. Ebola, he says, didn't come up in the discussion.

"We were having a good old-fashioned business meeting," he says. "They were not in any way spooked."

AP Business Writers Jonathan Fahey and Scott Mayerowitz in New York and Marcy Gordon in Washington contributed to this report.

 

Copyright 2014 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,313.97 +47.98 0.28%
S&P 500 2,017.09 +5.73 0.28%
NASDAQ 4,607.9960 +14.5710 0.32%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs