By Jeff Kapembwa
Lusaka – Coronavirus hit African economies may get relief as multilateral and bilateral financial institutions are considering availing US$100 billion to counter devastating effects of the plague.
The plague has seen thousands infected across the continent since it first broke out in China’s Hubei province last December. It has seen substantial drops in revenue from the fall in commodity prices, and this, coupled with increasing costs of imports, are putting pressure on both inflation and the exchange rates.
African finance ministers, during a second virtual meeting against the backdrop of the rising Covid-19 cases on the continent on Tuesday sought urgent debt relief. They are fearful Covid-19 effects may spiral out of control in the absence of stop-gap measures.
Concerned at the possible Covid-19 ramifications on their fledgling economies which might take 24-26 months to recover, the ministers agreed to secure debt relief from bilateral, multilateral and commercial partners.
A statement availed to The Southern Times stated that the African ministers had sought the support relief from multilateral and bilateral financial institutions such as the International Monetary Fund (IMF), the World Bank and the European Union to allow them fiscal space needed to deal with the Covid-19 crisis.
The call for debt relief, it was emphasised, is for all of Africa and will be undertaken in a coordinated and collaborative way. The ministers sought a special purpose vehicle being created to deal with all sovereign debt obligations.
“Substantial drops in revenue from commodity price drops coupled with increasing costs of imports is putting pressure on both inflation and the exchange rate,” read a statement from the United Nations Economic Commission (UNECA).
The meeting underscored that immediate focus remains on the health and humanitarian front. There is a need to continue the awareness-raising, testing, social distancing.
The ministers prayed that the debt relief would be lengthened on the account of the global economy entering a period of a synchronized slow down, with recovery only expected after about 24 to 36 months.
Countries shared their experiences and also discussed opportunities for mutual support. While acknowledging the commendable policy measures taken by governments, the ministers underscored that Africa’s economy is facing a deep and synchronized slow down and could take up to three years to turn the corner.
They stressed the need to take “all possible actions” to slow down and bring the spread of Covid-19 under control in the short-term but acknowledged this was an uphill battle.
Since Africa is a net importer of pharmaceutical products, enabling local continental production could serve to protect some jobs and guarantee the supply of essential medicines during the crisis.
Over 54 countries have banned exports of pharmaceutical products and the ministers called for an end to these procedures. Ministers called for joint protocols on border closures to allow for trade and humanitarian corridors.
There is a need for liquidity facilities, refinancing and guarantee facilities to support the private sector. The ministers regretted the enormous losses buffeting the airline and hospitality industries and sought the protection and preservation of the African airlines, logistics, and tourism industry.
This is an important job creating sector for millions of Africans and must be protected, they noted. The meeting further agreed to set up a meeting for countries affected by transport and tourism losses due to the pandemic, arguably to better plan on policies to combat the losses.
The stressed the use of technology such as mobile phones to support awareness, identify communities in need and create accountability and governance mechanisms around the use of the stimulus. They asked the ECA to work with telecommunications companies to design a system to support these objectives.
UNECA executive secretary, Vera Songwe, was part of the meeting, co-chaired by Ministers Tito Mboweni of South Africa and Ken Ofori-Atta of Ghana.