This is a global crisis affecting the whole world. Africa, however, will be hit harder with a heavy and durable economic toll, which will threaten progress and prospects, widen inequalities between and within countries, and worsen current fragilities.
African countries need support in preparing for the health crisis, and for the economic fallout. The measures being taken in Asia, Europe and North America such as physical (social) distancing and regular hand washing will be a particular challenge for countries with limited internet connectivity, dense populations, unequal access to water and limited social safety nets.
In line with the steps being taken across the globe, African countries are preparing for the worst effects of this pandemic.
Here are the three things the G20 must do:
Support for an immediate health and human response
G20 leaders should support and encourage open trade corridors, especially for pharmaceuticals and other health supplies, as well as support for the upgrade of health infrastructure and provide direct support to existing facilities. This will enable countries to focus on prevention as much as possible and start building curative facilities. Support should be provided to WHO and CDC Africa with funds channeled through the Global Fund, GAVI and others.
G20 leaders should support public health campaigns and access to information including through an expedited private sector partnership for internet connectivity to enable economic activity to continue during social distancing measures and to support the effective sharing of information about the pandemic.
Deliver an immediate emergency economic stimulus to African governments in their efforts to respond to the COVID-19 pandemic
G20 leaders should announce a US$100 billion (in addition to the $50bn already committed) to fund the immediate health response, social safety nets for the most vulnerable, feeding for out of school children, and to protect jobs. As a proportion of GDP this is consistent with measures taken in other regions. To ensure immediate fiscal space and liquidity, this package should include a waiver of all interest payments, estimated at US$44 billion for 2020.
G20 leaders should support a waiver on principal and interest for African Fragile States such as the Sahel, Central African Republic and others who are already struggling with the burden of debt and have limited fiscal space.
G20 leaders should endorse for enhanced predictability, transparency and accountability of financial flows so finance ministers can plan effectively and civil society stakeholders can help track flows to ensure reach those most in need.
Implement emergency measures to protect 30 million jobs immediately at risk across the continent, particularly in the tourism and airline sectors.
G20 leaders should take measures to support agricultural imports and exports, the pharmaceutical sector and the banking sector. An extended credit facility, refinancing schemes and guarantee facilities should be used to waive, restructure and provide additional liquidity in 2020.
G20 leaders should support a liquidity line available to the private sector operating in Africa to ensure essential purchases can continue and all SMEs dependent on trade can continue to function.
G20 leaders should ensure that national and regional stimulus packages covering private and financial systems include measures to support African businesses through allowing for the suspension of leasing, debt and other repayments to global businesses.
Three Things the G20 must do to support Africa in COVID-19 Pandemic
Afreximbank Announces $3-Billion Facility to Cushion Impact of COVID-19
The African Export-Import Bank (Afreximbank) has announced a $3-billion facility, named Pandemic Trade Impact Mitigation Facility (PATIMFA), to help African countries deal with the economic and health impacts of the COVID-19 pandemic.
PATIMFA, approved by the Bank’s Board of Directors during its sitting on 20 March, will provide financing to assist Afreximbank member countries to adjust in an orderly manner to the financial, economic and health services shocks caused by the COVID-19 pandemic, according to information released by the Bank.
It will support member country central banks, and other financial institutions to meet trade debt payments that fall due and to avert trade payment defaults, said Afreximbank. It will also be available to support and stabilize the foreign exchange resources of central banks of member countries, enabling them to support critical imports under emergency conditions.
In addition, PATIMFA will assist member countries whose fiscal revenues are tied to specific export revenues, such as mineral royalties, to manage any sudden fiscal revenue declines as a result of reduced export earnings. It will also provide emergency trade finance facilities for import of urgent needs to combat the pandemic, including medicine, medical equipment, hospital refitting, etc.
The facility will be available through direct funding, lines of credit, guarantees, cross-currency swaps and other similar instruments, according to Afreximbank.
Explaining the rationale for the facility, Prof. Benedict Oramah, President of Afreximbank, noted that the COVID-19 pandemic brought with it considerable suffering and major economic disruptions.
New dawn for Somalia: Arrears owed to the African Development Bank Group cleared
Arrears on loans owed by Somalia to the African Development Bank Group have been cleared following the payment in full of $122.55 million by the governments of the United Kingdom and the European Union, marking the end of sanctions and the resumption of full re-engagement between the Bank Group and the East African nation.
The long road to resolution of Somalia’s debt arrears began in 2014 and included the completion of three Staff Monitored Programs of the International Monetary Fund, and significant advances on a fourth program.
The process saw the high level of political commitment and consistent engagement of Somali President Mohamed Abdullahi Mohamed ‘Farmaajo’, and Prime Minister Hassan Ali Khayre. This translated into the implementation of reforms that gave confidence to international financial institutions, including the African Development Bank and the International Monetary Fund.
Speaking on behalf of the Somali government, Minister of Finance, Abdirahman Beileh, said: “The settlement of the arrears of Somalia to the African Development Bank, is a new beginning for us in Somalia. We stuck with our reforms, we were persistent, and it has paid off”.
In response, Bank President Akinwumi Adesina noted that it was a historic moment for Somalia. “I am absolutely delighted that the African Development Bank provided the leadership needed to push for and successfully negotiate the arrears clearance for Somalia. It was a reflection of the power of partnerships and consensus building,” Adesina said.
