The world’s finance leaders gathering virtually for the IMF/WB spring meetings this week, already know that to fight COVID-19 and its consequences requires emergency measures. It is also vital they realise that these measures should extend to Africa and be delivered through radically innovative data and digital delivery partnerships to raise and target the funds to help beat coronavirus globally.
We are ourselves a bit of a radical partnership: an anti-corruption, anti-poverty activist and a former Swiss banker and African minister are writing this together to help amplify calls from the African Union, the Economic Commission for Africa, private sector and civic leaders for three clear steps: dropping debt payments for two years; doubling concessional finance; and delivering openly and digitally.
Drop the Debt payments
African nations were due to make $44bn of debt payments in 2020. None of that should leave the continent this year or next. The Paris club and commercial creditors must accept a total debt standstill. Due to its reach in Africa, China is now a key creditor.
Chinese authorities must agree, and indeed lead, by dropping these debt payments. These steps immediately deliver funds for finance ministries who for the most part are doing the best they can, but are scrambling with lower commodities prices, declining revenues, collapsing currencies and soaring domestic needs.
It is unthinkable that China would not do this. It is also unthinkable that the big commercial banks would not support the citizens of African nations at this time. In developed markets, these banks have all requested and benefitted from extraordinary measures. It would be extraordinary if these measures didn’t now extend to Africa. The eye and ire of history will be on any who refuse to agree this debt deal.
Double Concessional Finance
After a big increase in the 2000’s, concessional public finance and aid to Africa have hovered around $45bn a year since 2010. $50bn more has been offered by the International Foreign Institutions (IFIs) in recent weeks for emerging and least developed economies.
If Africa got the bulk of that it would total just under $100bn. African finance ministers have now requested this be increased by another $100bn. This doubling of resources is necessary to stave runaway worsening of unemployment, poverty, hunger and insecurity across the continent.
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Debt relief can make up some of these sums and the balance can come from special measures – uppermost being a new issue and/or reallocation of the IMFs Special Drawing Rights (SDRs), a reserve currency held by the IMF for members.
It is in America’s interest to back this new issue, as it will not cost the US taxpayer.
We look to a coalition of the willing led by Europe to support this vital, urgent measure. SDRs could also provide a bridge to support the standstill with private creditors. If a sufficient quantity of SDRs is allocated – $500bn globally is a possibility under certain arrangements – it could help fill wider remaining funding gaps to develop and deliver that most critical global public good package: the vaccines, therapeutics, diagnostics and health systems that must arise from this COVID-19 catastrophe for all countries, across all continents
READ MORE: Africa needs debt relief to fight COVID-19
Deliver Openly and Digitally
It goes without saying that leaders must ensure this smart and life-saving money is used well. Africa has led the world in leapfrogging through mobile and Fintech. As a result we can now spread accurate health messages, collect data on symptoms from citizens, trace outbreaks, track financial flows through open budgets and contracts, map geospatial data with ground-truthed data collected by local ‘factivists’ and all this information can be analysed by collaborations of data scientists and AI to help predict, prevent and invest.
We can digitally target interventions and cash to the hardest hit sectors – such as tourism travel and trade related – and the hardest hit citizens and regions, such as the poorest women and men in urban and rural poverty.
These advances must not become tools for state oppression or unchecked market gain by predatory private players. Radical partnerships must extend connectivity more rapidly, more gender-equitably and zero-rate essential communications, ensuring it is all governed in the public interest.
Open collaboration is also identifying opportunities for African manufacturing capacity to step up to produce more essential pharmaceutical and other goods on the continent, as other regions threaten to stop life-saving exports to the continent.
Healthy lives, healthy societies, healthy environments
Some people and policymakers in OECD nations might question the cost of helping African citizens; thinking it is too much given their own huge domestic challenges. We must persuade each other and those in power that this is not an either/or scenario.
This African investment will be repaid in terms of collective health security, and sustainable economic activity, and would be just 2%, a tiny fraction, of the global stimulus so far.
Humanity has one common enemy, one common killer preying upon us. So we will beat it, but together. As we learn how to beat it, we will form fantastic new partnerships, exactly those unusual networks for wider system change that are needed for our shared struggles and opportunities beyond COVID-19: achieving gender equality, beating climate change, scoring the Sustainable Development Goals and building healthier lives, healthier societies and healthier environments for every citizen everywhere.
But none of us will get onto that promising path of the future if finance leaders this week fail to agree to this emergency debt, aid and open digital delivery partnership with Africa.
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