Cape Town — As the novel coronavirus spreads on the continent, The United Nations Economic Commission for Africa (UNECA) prepares to release a report on COVID-19 in Africa – Protecting Lives and Economies.
AllAfrica received an advance copy and spoke with Vera Songwe, ECA Executive Secretary, and Director of Regional Integration and Trade Division Stephen Karingi, who oversaw the report-writing process with Bartholomew Armah, Officer-in-Charge, Macroeconomic and Governance Division.
True to the words of United Nations Secretary-General António Guterres – “This is not a financial crisis. This is a human crisis.” – the UNECA report focuses on people, prosperity and partnerships, emphasising the importance of supporting Africans who lose their earnings during the COVID-19 crisis.
Between 300,000 and 3.3 million African people could lose their lives as a direct result of COVID-19, but it depends on the intervention that governments introduce, the report says.
“We think most likely it will be that lowest scenario of 300,000 but of course if there is so much of recklessness and the policy stance is not the right one, then those numbers may go up. But for us the headline is not three million but 300,000 and how we can bring that down even more,” said Songwe.
And in terms of “prosperity”, UNECA found that the economic impact “could be the slowing of growth to 1.8% in the best case scenario or a contraction of 2.6% in the worst case”. This means that 27 million people could face extreme poverty.
These challenges are compounded by the fact that more than 70% of Africa’s workers are informally employed, and most cannot work from home – made clear as several countries on the continent have gone into full lockdown to prevent the spread of COVID-19. Almost half of children under 5 are undernourished, many people live in overcrowded conditions with poor sanitation, there’s a high prevalence of underlying conditions like TB and HIV, as well as the low numbers of hospital beds, dependence on importing medical products, and not enough healthworkers.
“Around the lockdowns, there are some good examples around the continent of what is being done, like South Africa for example, where it’s harvest season now and people are rotating going into the farms. In the United States, they are actually asking for volunteers to come and do the harvesting in California. We are looking across the world to see what works and doesn’t work, and of course the continent is slightly different. Morocco is also testing a few other experiences and we need to pull those experiences together to see what is the best option.
“We have to always remember that human contact that spreads this thing… we’re talking about factories opening up to go and produce masks. We need to make sure that everyone working in the factories were tested, and secure. For areas where we can still have economic production, we should do that, the question is just how do you do it and ensure that people can go in to work without spreading the disease even more,” Songwe said.
But even if the spread of the novel coronavirus is arrested, the economic damage will be “unavoidable”, according to the report. Oil prices halved, textile and fresh-cut flower exports crashed and the tourism and airline industry effectively stopped.
The UNECA report proposes that – to prevent governments “losing control and facing unrest” – a rapid response is necessary: “To protect and build towards our shared prosperity at least $100 billion is needed to immediately resource a health and social safety net response. Another $100 billion is critical for economic emergency stimulus, including a debt standstill, the financing of a special purpose vehicle for commercial debt obligations, and provision of extra liquidity for the private sector.”
“The World Bank and IMF have come out in favour of a kind of debt relief … essentially what we want is to just freeze all debt service payment for two years for all of Africa, which puts money in the pockets of African governments immediately. A piece by two leading economists, Carmen Reinhart and Kenneth Rogoff, is asking for the same thing – saying ‘don’t just do low-income Africa’.
“And at some point we’re going to want all of the world’s economies to come back, and middle-income Africa imports about 80% of its good from Europe. So, if you don’t support middle-income Africa, it’s very difficult to revive those other economies,” Songwe said.
Key components of the UNECA report include:
- securing $100 billion to care for the most vulnerable and procure materials to save lives;
- providing a $100 billion fiscal stimulus package which includes support for businesses to keep jobs by allowing for the suspension of leasing, debt and other repayments;
- partnering with businesses to re purpose manufacturing towards essential medical supplies;
- ensuring that stimulus supports African businesses to keep jobs by allowing for the suspension of leasing, debt and other repayments;
- support for airlines, jobs and the future of tourism by issuing temporary tax waivers and encouraging banks to renegotiate loans;
- granting tax breaks to prevent firms collapsing, thereby preserving jobs and economic activity to earn export revenues in the recovery;
- boosting Internet connectivity and involve women in decision-making circles for policy responses;
- endorsing a complete temporary debt standstill for two years for all African countries, low and middle income included;
- doubling access to the IMF Emergency Financing Facility and raise IMF special drawing rights allocations;
- calling on development financial institutions to act counter-cyclically and quickly to provide a moratorium on interest and loan repayments to African private sector companies;
- involving women in decision-making circles for policy responses;
- not allowing pandemic-related official assistance to let private creditors to cash out of their positions;
- maintaining the momentum and ambition of the African Continental Free Trade Area.
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