According to a report of the World Economic Forum, COVID-19’s impact on Africa could be much worse than in other parts of the world. As the pandemic, COVID-19, spread throughout the world,
economically poorer countries are seriously affected by the effects of the virus—almost all African countries are in this category. As a means to overcome this challenge, African countries need not only get financial
supports but debts should also be written off.
In his articles on Bloomberg and Financial Times, Prime Minister Abiy Ahmed, has indicated that debt relief actions and other financial supports to Africa are not options but a must. In his recently published article on Financial Times, the Premier reiterated: “Africa needs an immediate emergency fiscal stimulus worth USD 100 billion in addition to the International Monetary Fund’s already programmed USD 50 billion of regular support to tackle the crisis.”
Noting that the ongoing crisis will not be short-lived, Abiy underscored the need to have additional support to Africa over the next two to three years from the International Community. He argued that without a vast restructuring of debt, all the continent’s recent gains will be wiped out. In his article, Abiy argued that debt relief measurement is the right direction towards helping Africa to survive the impact of COVID-19 pandemic.Africa will be the most victimized continent because of Corona virus.
But, the impact of African economic crisis will directly or indirectly affects the whole world. In this regard, global coordination and leadership are a must factors to halt the problem at early stage, he argues. African economy is fragile and unpredictable. In this regard, coordinated effort of the global community will help the continent from the already faced problem and COVID-19 related challenges as well. “We can defeat this invisible and vicious adversary — but only with global leadership.
Without that, Africa may suffer the worst, yet it will not be the last. We are all in this together, and we must work together to the end.”What seems normal and affordable to other continents is luxury for Africa. Supporting his claim Abiy said, “Ethiopia has made steady progress in the provision of health services over the past two decades. But nothing has prepared us for threats posed by Covid-19. Access to basic health services remains the exception rather than the norm. Even taking such common-sense precautions as washing hands is often an unaffordable luxury to the half of the population who lack access to clean water.”Indeed, debt cancelation is not an option to Africa in times of COVID 19.
Combating COVID 19 in Africa is more challenging than any other parts of the world for various reasons. Access to quality health service together with lack of effective professionals makes the fight against the virus more challenging. Sources indicated that, one-third of Africans cannot wash their hands regularly. This is not because they don`t need to. It is because of absence of clean water. Limited access to broadband connectivity, telework or other opportunities is beyond the grasp of most African countries. Almost all the preventive methods that are followed by international community are difficult and hard to implement in Africa for various reasons. For instance, the social distancing strategy, though effective and successful, is hard for countries like Ethiopia where people eat from same plate and live in a single roof with extended families. The traditional rain fed agriculture is also the other harshest side of African economy. Despite the fact that “Stay-at-home” order is one of the best solutions in fighting the virus, most Africans have no access to refrigerators to store perishable foods or medicines. What is more, scarcity of foreign currency has exacerbated the problem. This is particularly true to buy medical equipment and supplies.
As it was mentioned by Dr. Abiy, “Shortage of hard currency will then make it all but impossible to source essential medical supplies and equipment from abroad. The cost of servicing our debts is already often more than our annual health budgets.”As it was indicated by Project Syndicate-global opinion page- Africa needs an initial 100 billion USD financial support. The sharp decline in commodity price, trade and tourism has hit the continent hard. The corona pandemic has affected Africa directly and indirectly.
The tourism and trade sectors which were source of foreign currency are now parallelized. According to Project Syndicate “The average fiscal-support package announced by African governments so far amounts to a meager 0.8% of GDP, one-tenth the level in advanced economies. And, beyond the near term, the continent’s additional financing needs could rise to USD 200 billion.”
The international community should take the lead in creating mechanisms by which sovereign issuers suspend contractual market debt service. New approaches are needed that allow for the flexibility and sustainability of African economies.
The most urgent requirement is to suspend debt payments with the plurality of creditors.Indeed, as it was mentioned by World Economic Forum, many African governments have signaled a readiness to respond to the pandemic. But, designing measures that reflect reality, and ensuring its effectiveness is in question. This is due to the reason that most African countries are leading a lifestyle which is difficult to keep social distancing and to “stay-at-home”.
The Ethiopian Herald May 1/2020
BY LEULSEGED WORKU
