Albert Zeufack (World Bank): "A food crisis could add to the recession in Africa"

Text by: Olivier Rogez Follow

The World Bank chief economist for Africa believes that the recession that will hit Africa this year could have dire consequences if the international community does not act. A moratorium on the repayment of interest on the debt is essential, he said.

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RFI: Can we avoid a recession in Africa in 2020?

No, we are living in an extremely serious moment for Africa. Growth is likely to drop from + 2.4% in 2019 to - 2%, or even - 5% in 2020, which will be the first recession in twenty-five years. The impact will be felt on social well-being, that is, on the income and consumption of people in Africa.

How to explain such a magnitude?

There are four channels for transmitting this global crisis to Africa. The first is the fall in international trade and the fall in commodity prices that followed. Oil has lost 50% of its price and countries dependent on oil revenues are plunged into a budget crisis.

The second transmission channel is financial flows from advanced countries to sub-Saharan Africa. These range from foreign direct investment, aid, tourism - which has collapsed - and money transfers from the diaspora to families. The third channel of transmission is the shock to the health sector. Many people will be sick and they will have to be taken care of. The last channel is the disruption of economic activities induced by the containment policies that countries are adopting.

Should we fear a food crisis?

Our report states that agricultural production will drop by 2.6% in 2020. You should know that this crisis is hitting as the harvests approach in East Africa, and at a time when we are starting to plant in regions close to the equator, so there will be an impact on agricultural production.

Added to this is a drop in the import of food products. However, Africa imports $ 35 billion worth of food each year. With the trade barriers caused by the Covid-19, we observe that several countries are already having difficulties in obtaining basic foodstuffs. So yes, a possible food crisis could add to this economic crisis.

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What is the World Bank going to do to alleviate this crisis in Africa?

The World Bank is working with African countries to build a response based on two pillars. The first pillar consists in saving lives… Putting in place emergency health programs and strengthening health systems. The second pillar is that of protecting social welfare, the activities of men and businesses, so that there is not an explosion of unemployment and a sudden cessation of activities. It is important not to pit health against the economy, but to work on two fronts.

In addition, it is necessary for African governments not to simply copy what is done elsewhere, but to adapt to the structure of the economies and the resources at our disposal. As you know, African economies are characterized by a large informal sector which sometimes accounts for 90% of the workforce. So containment policies must be accompanied by policies of direct social assistance to populations, including at the level of basic commodities.

►Also listen: Decryption - How to prevent the health crisis from causing a food crisis?

There are already many countries that have taken the bull by the horns. South Africa, Senegal, Ivory Coast, Rwanda, Ethiopia, Burkina Faso ... Governments are in the process of implementing programs that can allow households to keep a little power to purchasing and businesses to avoid mass layoffs. Measures must be taken to support workers in the informal sector and this could involve direct transfers of money, as is already done in Kenya for example. Some countries assist households and businesses by delaying payment of taxes and bills.

On the question of debt and support measures, what is the World Bank doing?

It has mobilized nearly $ 160 billion to help countries around the world cope. With African countries, we are working to set up emergency programs, both in the health field and for the national budgets of the countries in order to recreate a little room for maneuver. The World Bank has already approved emergency programs for a dozen African countries.

We are also working with the IMF to ensure that, at the international community level, we can agree to a kind of moratorium on the payment of interest on the debt. Because this interest represents a large amount. If you take the year 2018, the interest on the debt of African countries amounted to 35 billion dollars, of which nine billion is due to countries at the end of the bilateral debt. It is important that we can all understand that this crisis requires a global response and that we must help African countries to recreate a little budgetary space to face the consequences.

Moratorium or cancellation ?

Sub-Saharan Africa may need one hundred billion dollars this year to deal with this crisis. Any solution would therefore be welcome. But you also have to realize that the debt structure has changed and that a large part is now private. These are issues by countries of eurobonds or bonds. So we will have to find a mechanism to discuss with the private sector and see to what extent it could also contribute to the general effort.

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• Economy
• Economy Africa
• Agriculture and Fisheries
• Food
• world Bank

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