Why the coronavirus must lead to the cancellation of African debt
Franc-CFA banknotes used in UMEOA zone, in West Africa. (Illustrative image. AFP
By: Dominique Baillard Follow
In Africa, the countdown has started. In two to three weeks the coronavirus could hit the entire continent hard, said Vera Songwe, director of the United Nations Economic Commission for Africa. What avenues to stop this deadly pandemic and limit its economic consequences?
In Africa 10 million people could succumb to Covid-19 warned Bill Gates a month ago. To prevent this hecatomb, African countries snap one after the other. Here as elsewhere killing the economy is the price to pay to save lives. But in a region where survival often depends on work done outside, to require residents to stay at home is to ask for the impossible, as the president of Benin Patrice Talon said yesterday. How to calmly consider their medical care when the number of resuscitation beds is on average 50 per country? Coronavirus treatment will add to an already heavy burden: Africa accounts for almost a quarter of the heaviest pathologies such as tuberculosis, malaria or HIV, but only 1% of overall expenditure health.
To deal with the emergency, however, several governments have managed to release funds
They are intended primarily for health. Ghana and Egypt have taken measures to support businesses. Ghana plans to provide direct aid to the most vulnerable households via mobile payments. And in the richest countries of the continent, Nigeria and South Africa, large private fortunes are taking out their check books to support the efforts of the state. But for the moment, no African state has the means to draw billions, as western countries have done to massively support their employees and their companies paralyzed by containment. To spend more public money, one must be able to resort to borrowing, yet African states are already on the bone. To stimulate growth, they borrowed in all directions. In seven years the debt burden has tripled in sub-Saharan Africa, going from 30 to 95% of the GDP.
At least twenty African countries have already appealed to the IMF in recent days
And not just the poorest. Ghana, which aspires to the status of emerging country, made the request last Tuesday. This weekend the locomotive of the continent, South Africa, also turned to international institutions. After being demoted to the category of debt issuers known as speculative by Moody's, the last agency that still supported it. The IMF has opened a $ 50 billion line of credit dedicated to emerging countries, including $ 10 billion for the poorest. But it is well below the real needs. It would take four times more, according to the Ghanaian finance minister.
The alternative advocated by African governments as well as IMF experts: debt cancellation. The director of the IMF's Africa department, Abebe Aemro Selassie, advocates the immediate deletion of bilateral debt and the suspension of repayments due to the IMF. Going beyond is undoubtedly necessary but hyper complex because a third of the African debt is held by private creditors. It is this private debt that generates the highest interest, but negotiating in an emergency with this nebula of actors, banks, funds, commodity traders is a tour de force.
► In short
In Germany Adidas and H and M want to suspend the payment of rents from their stores
A scandalous decision . The equipment manufacturer made 2 billion euros in profit in 2019. Other brands also intend to no longer pay their rents. The government is urging big business to find alternative solutions.
Oil markets fall sharply again on Monday morning
The barrel of American crude has dropped below the 20 dollar mark. Brent crude quoted in London fell to 23 dollars; oil prices have never been lower in 17 years.
Newsletter With the Daily Newsletter, find the headlines directly in your mailboxSubscribe
Follow all international news by downloading the RFI applicationgoogle-play-badge_FR
- Economy Africa
- Health and Medicine
On the same subject
G20: IMF and World Bank call for debt freeze for poor countries
IMF Unveils Economic Outlook for Sub-Saharan Africa