The economic fallout from the COVID-19 pandemic is expected to hit Africa particularly hard. The United Nations (UN) projects that GDP growth on the continent will drop from 3.2 percent to 1.8 percent this year, while experts say Africa needs 8 percent growth to reach UN Millennium Development Goals. Recognizing the imminent danger, the world’s largest economies and international organizations—the G20, International Monetary Fund (IMF), World Bank, and African Development Bank (AfDB)—are formulating a relief package that would incorporate requests by Ethiopian prime minister Abiy Ahmed and South African president Cyril Ramaphosa. They want rich countries to waive interest payments on debt and provide stimulus money through development organizations like the AfDB and IMF.
Work is under way on a proposal regarding the relief package for Africa , but a final decision is expected to suffer delays due to the crises piling up in Europe and the United States. In the meantime, Prime Minister Ahmed and French president Emmanuel Macron have discussed the prospect of reallocating money from the Global Fund to Fight AIDS, Tuberculosis, and Malaria to address COVID-19 instead.
In Ethiopia, the IMF and World Bank are close to issuing US$9 billion in financial aid from Western donors. On Ramaphosa’s end, he established an anti-COVID 19 Fund to which African Union member countries have agreed to contribute US$12.5 million. There is a growing fear that a worst-case scenario would have 28 million Ethiopians infected, turning the country into a “super-spreader” that would overwhelm global health systems.
Why It Matters
Besides the obvious benefits of a G20 relief package for Africa’s most vulnerable economies, a big injection of funds by Western powers would counter the recent trend of Chinese dominance on the continent, at least as it relates to financial assistance. It should not have taken a global health crisis to compel Western powers to bolster Africa’s healthcare capacity, but this pandemic nonetheless offers opportunities to recalibrate financial relations between Africa and its European and North American partners.