G20 members agreed early last week to suspend all debt payments owed by Africa until the end of the year, with the option to extend it to 2021. This debt relief scheme is meant to ensure money stays within Africa, which is poised to be one of the regions hit the hardest by the COVID-19 pandemic as African economic activities come to halt.
The World Bank projects sub-Saharan Africa will have its first recession in twenty-five years.
The IMF and World Bank stated on Friday, April 17, that Africa needed another US$114 billion to cope with COVID-19 this year, as the pandemic is expected to significantly affect the continent’s economy. In the World Bank’s twice-yearly economic update for sub-Saharan Africa, it projects the region will have its first recession in twenty-five years, with growth falling from 2.4 percent in 2019 to -2.1 percent to -5.1 percent in 2020.
Many Say This Is Only a First Step
A number of leaders, including Senegalese president Macky Sall, French president Emmanuel Macron, and Pope Francis, have called for a cancellation of a significant portion of Africa’s sovereign debt, which has ballooned to more than US$365 billion. China is owed just more than half of all of Africa’s sovereign debt, the consequence of the past decade-and-a-half of major infrastructure investments as part of the Belt and Road Initiative.
African Union representatives to the G20 have said that a debt payment deferment alone needs to operate on a two-year timescale at minimum in order to give the continent time to handle the immediate COVID-19 crisis and to strategize a stronger negotiating position for future debt restructuring plans.