A quarter of a century of economic progress in Africa has been interrupted by COVID-19. In just over 12 months the pandemic has slowed economic growth in Africa to a halt, increased levels of poverty and inequality and disrupted value chains.
This abrupt interruption to economic growth in Africa was unprecedented 15 months ago. And as one of the future drivers of global growth, the devastating interruption in progress puts the world at risk. At the end of May a special meeting was called for the European Council where members discussed what they call a ‘New Deal for Africa’.
Why the New Deal for Africa is necessary in a COVID-19 world
COVID-19 has brought home the risks of modern life. It’s taught the world that we can no longer think of global crises as something that will happen in an unnamed future. And nor can we ignore the problems of distance continents. In this way, the pandemic has been a leveller in that it has reinforced how dependent all countries are on each other. What happens in one country absolutely impacts others, and this is why Africa’s pandemic legacy is so vital for the future.
Africa is a continent with 1.3 billion people, and yet it has had fewer deaths than the UK. This is despite the fact that the UK’s population is about one 20th the size of Africa. However, the legacy of COVID-19 doesn’t just stem from the number of deaths. The pandemic’s overall impact on Africa is likely to be deeply rooted and sustained over a long period of time. And this could mean global destabilisation.
The main focus of the European Council summit was to agree four specific goals:
- To facilitate access to vaccines globally, including by producing them in Africa.
- To strengthen institutions across Africa in terms of their position within the global financial infrastructure.
- To relaunch private and public investment in Africa.
- To support large-scale funding of the private sector across African countries.
Unleashing Africa’s enormous potential
Africa is packed with potential. In theory, the continent has more than enough resources to overcome the pandemic and to go further and lead the global recovery into a period of sustainable growth. By this I mean that Africa has millions of innovative young people, enough natural resources to construct a local industrialised base and a hugely forward-thinking integration plan for the whole continent.
However, what Africa does not have are the tools to recover quickly from an enormous and unprecedented crisis. COVID-19 is a devastating crisis and, while some could argue it shouldn’t have been so ‘out of the blue’ given pandemic mapping over the last few years, it hit the world suddenly and massively.
According to the International Monetary Fund (IMF), by 2025 African countries will need around $285 billion in extra support. As yet, there is no plan in place to either get hold of these resources or implement them where they’re so desperately needed.
Right now, some other countries are starting to see signs of recovery and economic growth, but Africa is in danger of slashing opportunities for its young population if it cannot improve the social and economic impact of COVID-19.
International support has been strong
It’s true that there has been an enormous amount of international assistance since the pandemic was announced in March 2020. For example, the G20 suspended debt payments for developing countries. There has also been financial help from the EU, the World Bank and the IMF. However, many of these networks and institutions are coming to the end of their resources.
According to Charles Michel, President of the European Council, all of this is why a New Deal for Africa is necessary, and it must be ambitious and wide-ranging. One of the most important initial steps for any kind of initiative to take is ensuring there is access to vaccines. Thanks to the vaccination section of the Access to COVID-19 Tools (ACT) COVAX, there are now millions of vaccination doses headed to Africa over the next few months. COVAX has been working on this along with the African Vaccine Acquisition Task Team. As with many other regions, the first priority for vaccines are healthcare and medical workers.
However, even this is nowhere near enough to pull Africa ahead. Right now, mass vaccination is the single most important economic policy around the world. The benefits of a vaccination programme that may cost millions or billions are in the trillions. In other words, there is no more important investment in the world right now than vaccines.
This is why Africa must increase funding via innovative financial platforms and plough these funds into the ACT Accelerator. This is what will help Africa actually reach its vaccination rollout targets. Vaccination targets for Africa have been set by the Africa Centres for Disease Control and Prevention and stand at between 60 % and 70% of the total population of the continent.
More investment in education and health
The second part of the New Deal for Africa is a massive investment in education, the battle against the impact of climate change and in health. At the same time, Africa must be permitted to stay out of a potential cycle of debt.
At the special meeting, an agreement was consolidated concerning special drawing rights (SDRs) for Africa. SDRs are FX reserve assets in the form of units held on account for the IMF, and so represent a claim to this currency by the country in question – in this case, those in Africa. The agreement that has recently been decided is an extra allocation of $33 billion to African countries.
There is also a request for other countries to use some of their SDR allocations for Africa. Furthermore, institutions across Africa should be included in how the SDRs are used. This will help Africa move towards the Sustainable Development Goals deadline in 2030.
The final arm of the Africa New Deal is unleashing its entrepreneurial potential. Across Africa, there are many small and medium sized enterprises (SMEs), small businesses and micro businesses that are acting as a community lifeline. This is particularly the case for young people and women in the region. By improving access to funding for entrepreneurs, their companies will be supported during start up and beyond.
Present at the European Council Summit were:
- President of the European Council: Charles Michel.
- President of France: Emmanuel Macron.
- President of Rwanda: Paul Kagame.
- President of South Africa: Cyril Ramaphosa.
- President of Senegal: Macky Sall.
- Prime Minister of Portugal: António Costa.
- Prime Minister of Spain: Pedro Sánchez Pérez-Castejón.
- Prime Minister of Belgium: Alexander De Croo
- President of the European Commission: President of the European Commission.
- Crown Prince of Saudi Arabia: Mohammed bin Salman.
- Crown Prince of the Emirate of Abu Dhabi: Mohammed bin Zayed
- President of the Democratic Republic of the Congo and Chair of the African Union: Félix Antoine Tshisekedi Tshilombo.
- President of Togo: Faure Gnassingbé.
- President of Ivory Coast: Alassane Ouattara.
- President of Egypt: Abdel Fattah el-Sisi.
- President of Mozambique: Filipe Nyusi.
- President of Nigeria: Muhammadu Buhari.
- President of Burkina Faso: Roch Marc Christian Kaboré.
- President of the Comoros: Azali Assoumani.
- President of Ghana: Nana Akufo-Addo.
- President of Angola: João Lourenço.
- President of Ethiopia: Sahle-Work Zewde.
- President of Mauritania: Mohamed Ould el Ghazouani.
- President of Tunisia: Kaïs Saïed.
- Former President of Mali: Bah N’Daw,
- President of Niger: Mohamed Bazoum.
- Prime Minister of Chad: Pahimi Padacke.
- Prime Minister of Sudan: Abdalla Hamdok.
- Chair of the African Union Commission: Moussa Faki,
- President of Cameroon: Paul Biya.
- President of Benin: Patrice Talon. President of the Republic of the Congo: Denis Sassou Nguesso.