BY MENGISTEAB TESHOME and ABEBE WOLDE GIORGIS
Of late a virtual platform was organized by Africa Development Bank bringing together participants of a G20 Compact with Africa meeting last week and assessed Africa’s progress in fighting the Covid-19 pandemic.
The Compact with Africa is a G20 initiative that promotes macroeconomic, business and financing reforms to attract more private investment in Africa, including in infrastructure.
The conference brought together heads of state of the 12 Compact members and institutional partners, including the African Development Bank and the International Monetary Fund (IMF). It involved strategy discussions around attracting higher inflows of foreign direct investment to Africa and the urgent imperative to develop vaccine manufacturing capability on the African continent. Securing the continent’s recovery from the impacts of Covid-19 is one of the Compact’s near-term objectives.
Vaccine inequity was a recurring theme, and heads of state shared reforms that they had undertaken as part of the initiative. Closer international cooperation was urged to address climate change, debt levels and investment shortfalls.
Many speakers noted that reforms were yielding results. The IMF’s Kristalina Georgieva said that Compact countries outperform their peers. Ethiopia Prime Minister Abiy Ahmed said his country had stabilized its debt through prudent management and opened up its telecom sector for investment.
“We are meeting at a pivotal time in the relationship between Africa and the rest of the world,” said Italian prime minister Mario Draghi.
President Cyril Ramaphosa of South Africa emphasized that “Africa will not be able to recover until Africans are vaccinated.” President Emmanuel Macron said France had committed to providing $10 million vaccine doses for Africa.
African Development Bank President Akinwumi Adesina said that, the African Development Bank had committed to investing $3 billion dollars in building Africa’s pharmaceutical manufacturing capacity, including manufacturing of vaccines, while World Bank President David Mal pass highlighted vaccine financing programs set up in 54 countries, noting that more than half of these are in Africa.
African leaders reached consensus on the need for vaccine self-sufficiency as a longer-term solution. President Nana Akufo-Addo of Ghana said there should have been lessons learned from Ebola. European Commission President Ursula von der Leyen drew attention to the initiative to develop mRNA technology in Africa across different regional hubs.
African Development Bank President Adesina referred to the gains obtained by Compact members. “We have seen a lot of improvement in public private partnerships and in the cost and ease of doing business but also in terms of the companies that are investing in many African countries.” He also underscored the African Continental Free Trade Area and its expected impacts.
Other constraints discussed include rising levels of debt and restricted fiscal space resulting from the pandemic. “The reduction of liquidity,” hit us hard,” said Egyptian President Abdel Fattah Al Sisi. Although Ghana sustained growth through 2020, President Akufo-Addo acknowledged that national debt had risen to 77.1% of GDP.
A virtual session held on the sidelines of the conference provided a forum for German and African private sector representatives to discuss investment opportunities on the continent.
The Conference also agreed to make a follow-up session that focused on how to overcome economic, skills and intellectual property constraints to developing domestic mRNA vaccine manufacture across Africa.
The African Development Bank Group (AfDB) is Africa’s premier development finance institution. It comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). On the ground in 44 African countries with an external office in Japan, the AfDB contributes to the economic development and the social progress of its 54 regional member states.
Africa endowed with abundant natural resources Including arable land, water resources, forest, mine and others but due to the underdevelopment in terms of skilled labor, technology and finance the resource is still untapped as a result, the continent remains poor.
In order to exploit the natural resources, Africa needs to attract Foreign Direct Investment. Sofar, many multinational companies showed interest to invest on the continent particularly in mining and industries. However, the absence of sufficient infrastructure, energy and durable political stability hampers investors to limit their venture.
Africa can be said to be a younger continent because 70 percent of the population is below the age of 30. If this segment of the society gets sufficient education, health services and job opportunities it can create wealth. In fact, agriculture is the mainstay of many countries and more than 80 percent of the population is engaged in the sector however, due to less input and technology utilization, the sector remains subsistence as a result, the continent suffers from food deficit.
Not only these, the sector is vulnerable to climate change and global warming. In times of drought the sector suffers a great deal. Contrary to this, when excessive rainfall occurs, farmers lose a significant amount of their products. In addition to these, pests and herbs bring their own negative impact. As a consequence, the continent un able to feed itself and relied on aid. Hence, in order to reverse the situation Africa should adopt new agricultural technology and improve the way of farming.
As mentioned above the continent has a huge labor force but the excessive labor force remains idle due to the absence of job opportunities. Currently foreign investment is eyeing investing in manufacturing which can utilize agricultural products and excessive labor as inputs. In this regard, it can play a crucial role in boosting the economy. The emerging economies such as China, India and Turkey among others have been investing in sectors such as agriculture and manufacturing. They created jobs for thousands and most products are targets to tap foreign markets in the US and European Union. Such ventures played a pivotal role in boosting countries foreign currency earning capacity.
Nevertheless, Africa imports more than it exports to foreign markets. Capital goods, machinery, electrical equipment and oil are vital goods that Africa needs to transform its economy. But due to un able to cover the import bill, the continent is still forced to obtain loans from multinational financial institutions such as the World Bank and IMF. In addition, countries resorted to get loans from USA and European Union countries through bilateral agreement and currently the continent is leveled as a poor indebted continent. Recently when the G20 countries met in Rome agreed to assist the continent to forgive huge amounts of their debt.
To alleviate poverty and to support Africa to achieve socio-economic progress such support should be continued.
The Ethiopian Herald November 4/2021
