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We live in unprecedented and challenging times with the COVID pandemic. Globally, over 60 million people have been infected and over 1.4 million have died. In Africa, total infections are at over 2 million, with over 45,000 deaths.
The negative impacts on economies have been massive. The African Development Bank estimates that Africa’s GDP will decline by $ 173- 236 billion by the end of the year. Africa’s economic growth rate is expected to decline by 3.4 percent.
The world has become more fragile as we all face common existential risks. All are affected, developed and developing countries. There’s no coronavirus for developed countries and coronavirus for developing countries.
Our greatest test and task is to build effective partnerships and reinforce leadership to navigate through the pandemic, save as many lives as possible, reverse the trend, and put the world and its economies back on more resilient recovery pathways.
The African Development Bank showed leadership and responsiveness in supporting countries to address the pandemic. The Bank launched a $ 10 billion crisis response facility to support countries’ immediate needs for liquidity.
The Bank also launched a $ 3 billion fight COVID- 19 social bond on the global capital markets, the largest US dollar denominated social bond ever in the world history, now listed on the London Stock Exchange, Luxembourg Stock Exchange and Nasdaq.
The speed and quality of the economic recovery process from the pandemic will depend on our shared sense of collective responsibility and the financial capacity of developing countries to address immediate shocks, stabilise their economies, and invest in growing back.
Yet, the disparity in the financial capacity to tackle the pandemic is very stark. While developed countries have spent over $ 10 trillion as fiscal stimulus for their economies, with spending by Western Europe being 30 times what was spent on the Marshall Plan, developing countries have minuscule fiscal space.
These are stark inequalities which will affect the speed at which different economies recover from the effects of the pandemic. While social distancing is needed to prevent the spread of the virus, fiscal distancing must be avoided.
The digital divide has worsened. Countries with poor energy access, electrification rates and limited broadband access could not stay open to transition businesses to the virtual new normal.
The pandemic has further laid bare the divide in the labor market. Those with skills are able to keep their jobs, while low skilled workers, especially those employed in the informal sector lost jobs, worsened by the lockdowns. It’s estimated that up to 30 million jobs will be lost in Africa by the end of the year.
There’s a big divide in healthcare capacities. Prior to the pandemic, Africa had on average only 9 beds per 10,000 people, 2 equipped labs for COVID- 19 tests, 20 physicians per 10,000 people.
Developed countries have 10 times the number of physicians and nurses and spend 60 times per capita on health.
I am confident that these, and other challenges arising from the pandemic can be overcome. But we must re- think many things and do things much differently than before. We must not put new wine in old wine skins.
As Africa builds back, priority should be put on the quality of growth, not just the quantum of growth. Growth must be more equitable, and focus on sectors that are better able to create jobs.
Building back African economies with resilience requires addressing its high debt levels. Total outstanding debt on the continent is over $ 700 billion. While bilateral concessional debt finance has declined from 52 percent to 27 percent between 2000 and 2019, commercial debt owed to private creditors increased from 17 percent to 40 percent in the same period. Private commercial debtors held some $ 44 billion in Eurobond debt for 10 African countries at the end