African Ministers of Finance have launched a coordinated attempt to secure $100 billion debt relief following the economic impact of Coronavirus (COVID-19) on the continent.
The ministers said Africa’s economy is facing a deep and synchronised slowdown that could take up to three years to recover.
They spoke after a virtual meeting with Vera Songwe, the Executive Secretary of the Economic Commission for Africa (ECA).
At the meeting, they stressed the need to engage “all possible actions to slow down and bring the spread of COVID19 under control in the short term” but acknowledged that it will be an uphill battle.
Going forward, the ministers agreed to call for debt relief from bilateral, multilateral and commercial partners valued at $100 billion.
They plan to enlist the support of the multilateral and bilateral financial institutions such as the International Monetary Fund (IMF), the World Bank Group (WBG) and the European Union (EU).
This, they argued is “to ensure that African countries get the fiscal space required to deal with the COVID-19 crisis.”
The call for debt relief, the finance ministers emphasised, “should be for all of Africa and should be undertaken in a coordinated and collaborative way.”
Calling for the creation of a Special Purpose Vehicle (SPV) to deal with all sovereign debt obligations, the ministers expressed concern that “drops in revenue from commodity price drops coupled with increasing costs of imports is putting pressure on both inflation and the exchange rate.”
The ministers insisted that there was “need for a longer period for debt relief. Given that the global economy has entered a period of a synchronised slow down, with recovery only expected after about 24 to 36 months.”
They appealed to development partners to “consider debt relief and forbearance of interest payments over a 2 to three-year period for all African countries, Low Income Countries (LICs) and Medium Income Countries (MICs) alike.”
The ministers acknowledged the importance of the private sector for job creation and for the recovery effort and called on Development Finance Institutions (DFIs) to support the private sector at this difficult time.
In addition, since Africa is a net importer of pharmaceutical products, enabling local continental production they said “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.
The ministers also 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,” they said.
Giving the enormous losses being incurred in the airline and hospitality industry, the ministers called for the protection and preservation of the African airline, logistics and tourism industry.
They advocated: “For a stay on interest, lease and debt payments. This is an important job creating sector for millions of Africans and must be protected.”
The ministers agreed to set up a meeting for countries affected by transport and tourism losses due to the pandemic, in order to better plan on policies to combat the losses.
They all agreed that the continent’s immediate focus must remain on the health and humanitarian front. “There is a need to continue the awareness raising, testing, social distancing.
The ministers said they were happy with the use of technology, including mobile phones to support awareness and identify communities in need and creating accountability and governance mechanisms around the use of the stimulus.
They urged the ECA to work with telecommunications companies to design a system to support such objectives.