‘Adopt policy measures that foster green investments’

THE United Nations Economic Commission for Africa (ECA) has urged African countries to adopt policy measures that encourage green investments aimed at increasing productivity to facilitate durable recovery from the coronavirus crisis and achieve sustainable industrialisation.

This was said by Hopestone Kayiska Chavula, officer-in-charge of the macroeconomic analysis section in the think-tank’s macro-economics and governance division, at the beginning of the 39th ECA Committee of Experts of the Conference of African Ministers of Finance, Planning and Economic Development meeting underway in Addis Ababa, Ethiopia.

Chavula said COVID-19 had significantly affected social and economic development progress on the continent, adding that the ECA estimated that between 49 million and 161 million people would fall into deep poverty as a result of the crisis.

“Strengthening health systems, including through the establishment of regional state-of-the-art health centres is also critical.

“There is need for support from the international community to address liquidity constraints and promote recovery. This can be done through new issuance and reallocation of special drawing rights, lower cost of credit, orderly debt restructuring and recapitalisation of multilateral development banks (MDBs).”

Africa’s gross domestic product (GDP) is estimated to have contracted in 2020 despite recovering in the third and fourth quarters of 2020, but there is a positive 2021 outlook.

Fiscal deficits have widened due to increased government expenditure to halt the spread of the pandemic, with many more African countries at risk of debt distress as a result.

“Accommodative monetary policies have been maintained to cushion the negative effects of the pandemic on economic activity despite inflationary pressure in some countries,” Chavula said.

African trade declined but is expected to increase with the implementation of the African Continental Free Trade Area.

Real GDP growth remained subdued on the continent mainly due to the downside risks associated with the second wave of infections, lower commodity prices and significant fiscal risks as well as conflicts in some countries.

However, Chavula said 2021 looked positive due to the availability of COVID-19 vaccines and improved economic activity in the fourth quarter of 2020, reduced holiday and travel expenditure.

On the other hand, the pandemic has created an opportunity for a climate resilient green growth as an opportunity to drive recovery.