Africa: Covid-19 – U.S.$500 Billion Needed to Jump Start African Economies

AFRICAN ministers for finance have unanimously agreed that at least US$500 billion will be required to jump start their economies battered by the Covid-19 pandemic.

This came out during a recent virtual meeting for the ministers, which was convened by the United Nations Economic Commission for Africa (UNECA) and the International Monetary Fund (IMF).

The continental purse bearers were unanimous in their call for additional liquidity of US$500 billion in Special Drawing Rights (SDR), better market access, more concessional resources and an extension in the Debt Service Suspension Initiative (DSSI), given the prolonged nature of the pandemic.

UNECA executive secretary Vera Songwe and IMF managing director Kristalina Georgieva also attended the meeting, whose main aim was to discuss Africa’s immediate economic response to the Covid-19.

“We all know that the Covid-19 pandemic will persist for the next two to three years. Why are we extending the DSSI for six months and not 24 months?” queried Ken Ofori-Atta, Ghana’s Minister of Finance.

He added the cascading effects of the Covid-19 pandemic were “a frightening thing for a finance minister to witness when they don’t have the means to respond”.

On access to the markets, Egypt’s Minister of Finance Mohamed Maait said; “there’s a strong case for vulnerable countries to access the markets at affordable rates to afford essentials such as PPEs (personal protective equipment) and food for their populations.”

Equitable access to Covid-19 vaccines was also highlighted as an imperative for building a better continent.

“The world stands to lose an estimated US$9 trillion if only the rich get Covid-19 vaccines. 40% of this loss will be in advanced economies,” the IMF chief Georgieva said.

She noted there is need for; “bold and immediate action for response, recovery, and reset of African economies,” adding “liquidity and financing response is the bridge to vaccines and recovery.”

Songwe said the objective of the meeting was to seek IMF support in forging a way out of the crisis by transforming existing liquidity instruments and easing market access to alleviate the debt burden and provide much needed liquidity for Africa.

Georgieva urged the ministers to prepare for a focused and practical discussion during the 2021 Spring Meetings.

“Now is the moment to demonstrate that SDR allocation can be part of a comprehensive support framework, together with debt reduction, debt relief and policy support actions in the countries,” she said.

The ministers agreed on the need for concerted efforts to accelerate reforms and increase revenues, improve expenditure, and manage debt to attract more private sector investments into Africa.