World Bank Group and IMF mobilize partners in the fight against COVID-19 in Africa
The World Bank Group and International Monetary Fund on Friday convened African leaders, bilateral partners, and multilateral institutions to spur faster action on COVID-19 response in African countries.
H.E. Cyril Ramaphosa of South Africa, United Nations Secretary General Antonio Guterres, Director General of the WHO Dr. Tedros Adhanom Ghebreyesus, Africa Union Commission Chairperson Moussa Faki Mahamat, and officials of individual countries outlined their policy plans for effective use of resources, multilateral organizations including the United Nations pledged their continued support, and bilateral partners reemphasized their commitment to a debt standstill beginning May 1, 2020. This comes in response to calls from the World Bank Group President Malpass, International Monetary Fund Managing Director Georgieva, and other partners for creditors to suspend debt repayments in order to provide much-needed support to the poorest countries.
“This pandemic has already had a devastating impact on Africa and its effects will deepen as the rate of infection rises. It is a setback for the progress we have made to eradicate poverty, inequality and underdevelopment,” African Union Chairperson and President of South Africa, H.E. Cyril Ramaphosa said. “While recent announcements from international partners are very welcome, large financing gaps remain and greater support is needed to ensure that African countries are able to respond effectively to the health crisis and address economic challenges.”
Together, official creditors have mobilized up to $57 billion for Africa in 2020 alone – including upwards of $18 billion from the IMF and the World Bank each – to provide front-line health services, support the poor and vulnerable, and keep economies afloat in the face of the worst global economic downturn since the 1930s. Private creditor support this year could amount to an estimated $13 billion. This is an important start, but the continent needs an estimated $114 billion in 2020 in its fight against COVID-19, leaving a financing gap of around $44 billion.
The World Bank Group and the IMF suggested a range of financing options and policy tools as part of the pandemic response, many of which African countries are looking to implement as they plan for the medium and long-term impacts of the crisis. These include further financing from official and private sector creditors.
“The World Bank Group is putting its full capacity to work for people across Africa as they fight this pandemic,” said World Bank Group President David Malpass. “The world has rarely seen a crisis of this magnitude, and no one can stand on the sidelines; we cannot leave any country behind in our response. We have provided emergency support to 30 countries across Africa so far, with more to come, and will continue to advocate for debt relief and increased resources, especially for those countries hardest hit by COVID-19.”
“Our message is clear: We stand with Africa: Through our commitments today we are ‘Mobilizing with Africa’ to help soften the blow of COVID-19 on the continent,” IMF Managing Director Kristalina Georgieva said. “The pandemic is having a monumental impact across Africa and the IMF is leaning forward with many other partners to leverage our resources and to help save lives and livelihoods.” She added that “The IMF will provide more concessional financing and we count on others to step up and do their part, to shield the economy and the people, and provide the foundations for a strong and sustainable recovery”.
It will also be critical for African countries to work together especially on the health response and on limiting trade disruptions to ensure freer movement of medical and food supplies. With so many people working in informal jobs – 89 percent of workers in Sub-Saharan Africa alone – countries need to take immediate steps to expand social safety net programs and support workers and small enterprises. Government services will equally need attention to keep running effectively for the duration of this crisis.
World Bank Group and IMF leaders applauded the groundbreaking accord among G20 countries to temporarily suspend debt payments to IDA and least developed countries beginning May 1, 2020.
The World Bank Group is taking broad, fast action to help developing countries strengthen their pandemic response, increase disease surveillance, improve public health interventions, and help the private sector continue to operate and sustain jobs. It is deploying up to $160 billion in financial support, $55 billion of which will be for Africa, over the next 15 months to help countries protect the poor and vulnerable, support businesses, and bolster economic recovery.
The IMF has been moving rapidly to provide comprehensive support its member countries, by leveraging our $1 trillion lending capacity; doubling annual access limits for our rapid disbursing vehicles to about $100 billion to respond to unprecedented calls for emergency financing from more than 100 countries; approving a short-term liquidity line for countries with very strong economic fundamentals and exploring additional tools to help meet countries’ financing needs; and, revamping our Catastrophe Containment and Relief Trust to help 29 of our poorest and most vulnerable members through rapid debt service relief, 23 of which are in Africa.
Opening Remarks by IMF Managing Director Kristalina Georgieva
Good morning. Excellencies, Ministers of Finance, Ladies and Gentlemen – thank you for participating in this important event.
We are here today to work in partnership with Africa and to bring more attention and more resources to Africa so that the continent can overcome this unprecedented crisis.
The COVID-19 pandemic has turned our world upside down, causing tragic loss of life and disrupting our social and economic order. As you will have seen from our World Economic Outlook, we anticipate the worst global downturn since the Great Depression.
For Africa, we project an economic contraction of at least 1¼ percent this year—the worst reading on record. Already weak fiscal positions will further deteriorate at a time when it is imperative to deploy fiscal policy to strengthen health systems and support vulnerable households and businesses. It is clear that without rapid and adequate international support, the crisis threatens to reverse the continent’s development gains and damage prospects for years to come.
This is the spirit of the call made a few days ago by 18 African and European leaders, among them President Ramaphosa who is with us today, President Macron, and Chancellor Merkel, under the title “Only victory in Africa can end the pandemic everywhere.”
Our meeting today on "mobilizing with Africa" is also about international solidarity and rapid action to address both the health emergency and its economic consequences in the continent. The region is hard-hit and does not have the healthcare capacity, nor the resources, to face this crisis alone. Fiscal space is limited, and fiscal financing needs to address the crisis are large – at least $114 billion for this year. Our decisive actions have helped to meet some of these needs, but there is a US$44 billion gap we must strive to close.
We have a joint responsibility to mobilizing with Africa in its fight against the pandemic and its economic fallout. Let me highlight three proposals:
First – Options for rapid and scaled-up financing for Africa. The IMF is mobilizing upwards of US$18 billion for Africa in 2020. We have temporarily doubled access under our emergency facilities and streamlined our procedures to deliver rapid financial support to our members – including responding to over 40 requests from our member countries in Africa. We are also seeking to replenish the Poverty Reduction and Growth Trust with the objective to triple our concessional lending capacity for low-income countries. In this respect, I was very heartened by the membership’s response yesterday, with Japan, France, the UK, Canada, Australia and several others promising commitments that take us to 70 percent of the resources needed for this goal.
Second – Garnering support for debt relief. We wholeheartedly welcome the G-20’s decision to suspend debt service payments from IDA-eligible least developed countries (39 countries in Africa) to official bilateral creditors through end-2020, which responds to a joint call I made with David Malpass few weeks ago. I would like to recognize the work done by France, Germany, China, and Saudi Arabia in pushing through this deal. We have also reformed the IMF’s Catastrophe and Containment Relief Trust to provide debt relief to our poorest members, of which 23 are in Africa and are seeking additional funds to extend the duration of relief. We call on private creditors to also be part of the solution. Together with the World Bank, we will pay close attention to countries faced with high burdens of debt.
Third – Identifying policy responses to deal with the current shock. The IMF has stepped up advice and knowledge-sharing on policies to address the crisis. We support prioritizing policy action to strengthen health services and so protect the most vulnerable people and parts of the economy. We want to see Africa not only managing these challenging issues, but also capitalizing upon the opportunities the crisis will present – to become more competitive and to leap forward, for example, with e-governance and fintech.
Let me conclude. Working with Africa, I have no doubt that we will overcome this crisis and ensure that Africa will become the most dynamic region in the 21st Century.
AUC Chairperson Moussa Faki Mahamat’s Remarks
I would like to thank you for the opportunity to participate in this high level meeting.
Much has already been said by the previous speakers, and I totally agree with the Chair of the Union President Cyril Ramaphosa.
But I would like to emphasise the situation today on the ground in Africa, keeping in mind that Africa’s continental strategy is already in full swing coordinated by the Africa Union Commission that includes both a response to the public health needs and the socio-economic challenges of this pandemic.
As of today, fifty-two (52) out of the fifty-five (55) AU Member States have reported almost nineteen thousand (19,000) COVID-19 cases and almost one thousand (1,000) deaths. Local transmission is now in forty-three (43) of our member states.
Given that the testing capacity in many of our countries remains poor, I’m sure these figures do not tell the full picture of transmission.
Which is why AfricaCDC, the public health arm of the African Union, needs immediate support to procure life saving medical supplies, but in particular, to increase testing capacities in our countries.
AfricaCDC urgently needs four hundred and thirty million dollars (430million) to implement the Continental strategy, out of which three hundred and fifty million dollars would be to procure urgently needed medical supplies.
Technical discussions with the World Bank are already underway, but time is of the essence. I ask you David for your support to fast track these discussions so these urgent funds are made available to AfricaCDC.
If we get these funds quickly, and when I say quickly, I mean next week or this month, it may buy us precious time to inverse some transmission trends
As you know, African countries are already putting all our modest resources to address the pandemic and ensure socio-economic safety nets in our countries, where eighty-five percent of our people work in the informal economic sectors.
African Finance ministers have estimated the needs to be two hundred billion dollars for the Continent to absorb this extraordinary external shock. And probably more for recovery. But these remain estimations and you and the four AU Special Envoys know better than me about economic projections.
The socio-economic dimension of this pandemic is as crucial as the public health needs. And in Africa, the risks are more pronounced than any where else in the world.
Our public health systems are near breaking point and this crisis risks to reverse the Continent’s hard- won economic and social achievements of the last 30 years. Without your support, this scenario is very probable.
In these extraordinary circumstances, we need extraordinary solutions. To do this, there is need for speed. This is not business as usual, Ladies and Gentlemen, and the normal rules cannot apply. Many countries in the developed world have already gone beyond established frameworks in order to respond to the social and economic impact of the pandemic.
Let us not forget during these times that we need solutions that take into account the different realities of our member states. Many of which are already facing security and terrorism challenges and others under crippling international sanctions, as in Sudan and Zimbabwe.
In this regard, we ask for the suspension of Africa’s public debt for at least two years, and why not, debt cancellation altogether, to ensure that Africa has the fiscal space to devote our resources to response and recovery while we work towards therapeutics or a vaccine when it becomes available.
We are grateful for the steps already taken on debt by the G20, the IMF, the World Bank and others. It is an important first step, but it simply does not go far enough. It also needs to be inclusive to all African countries, recognising the inter connectedness of our economies.
We should also not compromise existing core programs such as vaccination and immunisation by redirecting already committed resources to the pandemic.
We ask for equity based on solidarity, not as a concept of gestures of sympathy, but collective global action, organized around shared vulnerability and common interests, and directed toward common goals.
The World has the means. Let us now mobilise the political will.
This is NOT the time for hesitation or political calculus. We must move now, and we must move together.
The African Union and its members will play their part and we want to count on the solidarity of every one of you here.