DON'T MISS : Talking Africa New Podcast – Coronavirus warrior Dr John Nkengasong is not happy about corruption in PPE procurement

Coronavirus: Africa must act on World Bank/IMF debt-relief proposal

In depth
This article is part of the dossier: Corona Chronicles: 30 March – 3 April
David Himbara
By David Himbara

Professor of international development based at Centennial College, Toronto, Canada.

Posted on Monday, 30 March 2020 09:58, updated on Monday, 6 April 2020 19:25

Many labour markets in Africa remain dominated by poorly paid informal employment. REUTERS/Thomas Mukoya

Coronavirus compounds existing poverty challenges in sub-Saharan Africa (SSA) and requires urgent action to avoid economic collapse.

Even before coronavirus struck, SSA was the epicentre of global poverty. Of the 46 countries that make up the zone, 23 are classified by the World Bank as low-income, with a gross national income (GNI) per head of $1,025 or less.

The World Bank’s poverty data indicates that the percentage of the population living on less than the international poverty line of $1.90 per day ranges from 38% in Chad to 77% in Madagascar.

SSA’s COVID-19 cases are increasing rapidly, and it is the region least equipped to save lives while sustaining the economy and employment. As the region’s governments attempt to stop the spread, they run into at least four major problems:

  • First, healthcare systems – which were already rudimentary – cannot cope with the sudden increase in the number of patients.
  • Second, because the workforce in the region is largely comprised of workers who depend on daily wages, total lockdown is tantamount to starvation.
  • Third, these countries do not have money to supplement their citizens’ incomes if employees in the public and private sectors do not report to work. Nor are SSA governments able to save the private sector from total collapse if businesses have to cease their operations for months.
  • Fourth, the closure of international borders means SSA can neither export the raw materials it depends on, nor draw tourists that constitute considerable inflows of capital. This is also true of foreign direct investment.

In other words, SSA’s economies could soon grind to a halt.

READ MORE: WHO’s Tedros: ‘Don’t abandon the poorest to coronavirus’

Immediate assistance proposed to the poorest countries

On 25 March, the World Bank and IMF issued a joint statement to the G20 concerning debt relief for the world’s poorest countries. The Bank and the IMF called on bilateral creditors to suspend debt payments from poor countries that request the relief with immediate effect.

They argued that this relief will help low-income countries’ immediate liquidity needs to tackle the coronavirus outbreak.

Crucially, the two funders recognise the money freed by the suspension of debt repayment is only the first step that will allow time for an assessment of the crisis’s impact and the financing needs of each country.

The two institutions indicated their readiness to identify countries with unsustainable debt situations and to prepare a proposal for comprehensive action by official bilateral creditors to address financing and debt-relief needs.

READ MORE: Coronavirus: 5 economies to watch as the impact spreads

Sub-Saharan Africa needs such a proposal 

Currently, the African Union (AU) is led by South Africa’s President Cyril Ramaphosa.

Because South Africa is the African country (so far) most affected by coronavirus and Ramaphosa is busy managing the crisis at home, the AU has not presented a coherent strategy for addressing the coronavirus pandemic.

The joint World Bank/IMF call to action is the only proposal currently on the table. Sub-Saharan Africa should therefore immediately embrace the proposal and urgently take action accordingly.

Also in this in Depth:

Youssou N’Dour to Bobi Wine, African musicians join fight against coronavirus

African music stars are taking more action than ever before to combat the pandemic, through donations, songs, awareness-raising music videos and appeals to fans.

Religion in Nigeria despite coronavirus measures

Around Nigeria, religious and social gatherings have been restricted to 20 people, in an effort to stop the spread of the coronavirus. This is having a big impact on the country's churches and mosques.

Nairobi’s fight against Coronavirus gets violent

Nairobi is a city on edge, as its 4.4 million residents try to avoid getting infected from coronavirus during the day, during the dusk-to-dawn curfew, they try to avoid police brutality.

Nigeria introduces stimulus package to ease coronavirus hit

The Central Bank of Nigeria (CBN) has introduced a stimulus package to help households and small businesses hardest hit by the adverse impact of the coronavirus pandemic. 

Exclusive – UN’s Antonio Guterres: “In the face of the pandemic, a moratorium on African debt is necessary”.

The world is facing a crisis of the likes not seen since 1945 and the creation of the United Nations. Antonio Guterres spoke about this on Tuesday 31 March to Jeune Afrique, while unveiling the report which takes stock of measures to be taken to deal with the COVID-19 pandemic. Measures that address health, economic and social aspects of the crisis.

Nigeria’s banks face direct hit from geared-up oil producers

The leverage and hedging strategies against lower prices used by Nigeria’s oil producers will determine their chances of survival – and the size of the hit to their lenders.

South African corporates step up to fight coronavirus

The spike in demand for hand sanitiser has spurred Sasol to develop a new variant of its alcohol-based chemicals to help manufacturers fill the gap.

Nigeria’s locked-down drinks industry raises bootleg alcohol risks

Disruption to supplies of alcohol in Nigeria due to coronavirus risks spurring the consumption of dangerous illicit brews.

Coronavirus in Algeria: A country’s last warning

The coronavirus outbreak has deepened Algeria’s legitimacy crisis. This could easily become a crisis between the state and Algerians, leading to a radical revolt. But it has also given Hirak the opportunity to think about new forms of peaceful struggle and the possibility of providing an alternative to the system.

We value your privacy

The Africa Report uses cookies to provide you with a quality user experience, measure audience, and provide you with personalized advertising. By continuing on The Africa Report, you agree to the use of cookies under the terms of our privacy policy.
You can change your preferences at any time.