Addis Ababa May 13/2022 /ENA/ Combinations of efforts at national, continental, and global levels are needed to respond to the shocks endured by Africa in the wake of the COVID-19 pandemic as well as the war between Russia and Ukraine, Economy Commission for Africa (ECA) Deputy Executive Secretary Hanan Morsy said.Thank you for reading this post, don't forget to subscribe!
Speaking on the annual Conference of African Ministers of Finance, Planning and Economic Development (CoM 2022), in Dakar, Senegal, Morsy noted that the continent is hit with shocks in food, fuel and finance.
“Even before the pandemic, Africa had huge development financing needs. In terms of infrastructure, it is estimated that the continent needed 150 to 170 billion USD a year. For education, we have a financing gap of 39 billion USD a year. Africa also needs 3 to 5% of its GDP to finance climate action. These were complicated by the pandemic,” she elaborated.
Among other global financing dynamics, the issue of higher inflation in Europe and elsewhere increased external borrowing costs for African countries and raised the risks of capital reversal, she said, and stressed that “when the war started in Ukraine, the slow and steady recovery being made by Africa was put to another test.”
Africa has also seen the price of fertilizers double, and oil and food prices increase because Russia and Ukraine represent a large share in terms of commodities in wheat, maize, barley, oil and gas.
Households spend an average of 42% of expenditure on food, Morsy pointed out. “This means that shocks produced by the war hurt the most vulnerable, mostly in Africa.”
The deputy executive secretary finally referred to the conclusions drawn by a working group constituted by the Ministerial Committee before CoM 2022 to confront the shocks in the short term.
The working group advocates “to extend the debt service suspension initiative by another two years and waive away the IMF surcharges for two to three years. In terms of emergency financing too, the IMF needs to raise the access limits for countries to secure funding.”
On the continental level, she implored African governments to support the ECA proposed Liquidity and Sustainability Facility, advocate for partial guarantees to de-risk private sector financing and use more liability management system to extend maturities, review tax exemptions for the private sector and scale up national resource mobilization.
The annual Conference of African Ministers of Finance, Planning and Economic Development (CoM) is the ECA’s largest annual event and provides an opportunity for participants to debate key issues on Africa’s development and discuss the think tank’s performance in delivering on its mandate.