Lifeline to Africa’s Future: G20’s Debt Freeze Pledge to Help Africa Deal With Covid-19 Crisis

Written by | Wednesday, April 22nd, 2020
@Eubulletin

Since the World Health Organization (WTO) in January declared the Covid-19 outbreak as a Public Health Emergency of International Concern, the coronavirus has brought the world to a virtual standstill. With the number of global Covid-19 cases standing at over 2 million, death toll still climbing fast and billions of people remaining in lockdown, Africa seems to have been somewhat spared from the extreme pandemic scenarios seen in China, many parts of Europe and the US, though the numbers are rising rapidly and its impact is of a great concern. If the Covid-19 pandemics continues to spread, weak healthcare systems in most African countries will be immensely overwhelmed and not able to deal with the raging virus. As even the best health systems in rich countries have struggled to respond to the outbreak, the African continent is more vulnerable to the impact of Covid-19, with many countries still recovering or even having to deal with recent outbreaks of Ebola, measles and other diseases.
It is the socio-economic impact of the pandemic on the continent that is particularly worrisome. The economic impact of Covid-19 on Africa is likely to be acute through a sharp decline in productivity, jobs and the rising debt levels. The continent is in danger of losing 30 million jobs, with more than a third of African countries at risk of debt distress. Globally, 64 countries – 30 of which are in Sub-Saharan Africa – spend more on repaying public debt than investment on public health. African countries‘ exports and imports are projected to be reduced by at least 35% from the 2019 level, which will result in a loss estimated at around €249 billion or half of its GDP growth, from 3.2% to 1.8% (with other contributing factors being mainly shrinking investment, supply chain disruptions and lower remittances).
To address this looming crisis, G20 finance ministers and reserve bank governors of the world’s biggest economies held a virtual meeting last week to agree on ways they could help African countries and elsewhere to make liquidity available in order for them to direct funds towards healthcare systems and economic recovery. G20 countries therefore agreed to implement a debt freeze for poor countries, starting from 1 May until the end of the year, with an option to extend until the end of 2021. However, experts point out that given such an inadequate timeframe of the debt freeze, African countries will still struggle to recover from the dire economic consequences of the coronavirus. China, as a prominent lender to Africa, must also play a leading role in debt relief for African countries. And G20 leaders should also provide Africa with an emergency economic stimulus of €92 billion, as requested by African governments, to fund the immediate health response on the continent, to prop up the struggling economy to safeguard 30 million jobs and boost social safety nets for the most vulnerable, including feeding and protecting out of school children.

Article Categories:
Africa · GLOBAL EUROPE

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