African finance ministers met in a virtual conference to exchange ideas on the efforts of their respective governments in dealing with the social and economic impacts of COVID-19, which disrupted global supply chain and hindered movement of people across the world.
The latest assessment of the UN Economic Commission for Africa shows that African economies will be hit severely by the impacts of COVID-19, which has disruption global supply chain, and also most halved the price of crude oil. During the meeting held on 19 March they noted that even before the COVID-19 pandemic, Africa was already experiencing a huge financing gap in funding measures and programs aimed at realizing SDGs and Agenda 2063 targets and goals.
The Ministers emphasized that without coordinated efforts, the COVID-19 pandemic will have major and adverse implications on African economies and the society at large. Original economic forecasts in most economies are on average, being downgraded by 2-3 percentage points for 2020 due to the pandemic.
The Ministers agreed on the following:
· As part of an immediate health response, there is a need for a coordinated response in the logistics and delivery of testing equipment. In this regard, the ministers emphasized the need to work with the WHO and existing continental institutions, in particular, the African Union and Africa CDC, while making maximum use of existing systems and funding partners, such as the Global Fund. Particular attention should be placed on fragile states and vulnerable populations, especially women and children and those living in informal urban settlements.
Further, given the limited health infrastructure and the fact that most of the pharmaceuticals and medical supplies consumed in Africa are imported, the Ministers called on the international community to support the upgrade of the health infrastructure and to provide direct support to the existing facilities.
· Africa needs an immediate emergency economic stimulus to the tune of US$100 billion. As such, the waiver of all interest payments, estimated at US$44 billion for 2020, and the possible extension of the waiver to the medium term, would provide immediate fiscal space and liquidity to the Governments, in their efforts to respond to the COVID-19 pandemic.
The interest payments waiver should include not only interest payments on public debt, but also on sovereign bonds. For fragile states, the ministers agreed on the need to consider waiving principal and interest and encourage the use of existing facilities in the World Bank, International Monetary Fund (IMF), African Development Bank (AfDB) and other regional institutions.
· In addition, the ministers underscored the need to support the private sector and protect the over 30 million jobs at risk, particularly in the tourism and airline sectors across the continent. In other critical sectors including agriculture, imports and exports, pharmaceuticals and in banking, the ministers agreed that all interest and principal payments on corporate debt, leases, extended credit facilities, refinancing schemes and guarantee facilities should be used to waive, restructure and provide additional liquidity in 2020.
A liquidity line should also be made available to the private sector to ensure the continuity of essential purchases and all SMEs that are dependent on trade can continue to function. These measures, it was agreed, must accompany a policy of opening borders for trade. In this regard, the ministers noted that Europe and the United States, in particular, can build this in as part of their stimulus to their private and financial systems. Furthermore, it was agreed that the G20 can arbitrate this as Africa’s four main trading partners are Europe, China, US, and India.