3 Year for African Agricultural Economy to Revive
Africa’s economy is facing a synchronized slowdown thanks to the novel coronavirus disease (COVID-19) outbreak and will take up to 3 years to show the corner, consistent with African ministers of finance.
The ministers said this during a meeting organized by Vera Songwe, secretary, Economic Commission for Africa on March 31, 2020. The gross domestic product rate of growth may decline by 3-8 percentage points in 2020, consistent with a recent McKinsey & Company analysis. Over 52,000 positive cases and 172 deaths are reported from 48 of the continent’s 54 countries.
According to African ministers of finance:
The COVID-19 pandemic will have drastic health, social and economic consequences within the continent. The “pandemic shock” will end in a drastic loss of revenues and a slower economic process. The continent would wish $100 billion in immediate emergency financing to affect the pandemic.
The first such meeting was with Saint Joseph, 2020, and therefore the second on March 31. The aim was to underline the health crisis and wish for debt relief and monetary stimulus. The ministers also stressed the necessity to spice up the private sector — especially tourism, airlines, and little and medium enterprises. According to the Institute of International Finance, South Africa’s economy is estimated to contract by 2.5 percent in 2020, but decreasing demand, travel restrictions, and pandemic-related closures could lead to a deeper recession.
South Africa, with over 1,300 positive cases thus far, is that the most affected African country followed by Egypt (656) and Algeria.
Warning that COVID-19 outbreak could spiral out of control, the ministers urged for $100bn immediate emergency financing. South African President Cyril Ramaphosa had earlier appealed for an equivalent at the virtual G20 summit persisted on March 26, 2020. consistent with media reports, Ethiopian Prime Minister Abiy Ahmed had sought $150 billion.
The ministers underlined the necessity to boost awareness, testing, and social distancing. They involved debt relief from bilateral, multilateral, and commercial partners with the support of the multilateral and bilateral financial institutions like the International fund, the planet Bank Group and therefore the European Union. This would ensure fiscal space for the African countries required to affect the COVID19 crisis, said, ministers.
Special purpose vehicle required
The ministers involved a special purpose vehicle to affect all sovereign debt obligations. Substantial drops in revenue from commodity price drops including increasing costs of imports is putting pressure on both inflation and therefore the rate of exchange, they said. Pointing to the worldwide economy which “may take two to 3 years to recover”, they urged their partners on the necessity to think about debt relief and forbearance of interest payments over three years for all low- and middle-income countries.
On the opposite hand, there’s a looming fear of unemployment, underemployment, and dealing poverty across the planet, including Africa, consistent with International Labour Organisation analysis.
Under these circumstances, the private sector can help create jobs. The ministers, thereby, appealed to Development Finance Institutions to support the world.
It may be noted that the continent relies totally on imports — of finished products, raw ingredients, and active pharmaceutical ingredients — to satisfy local demands. consistent with Mckinsey & Company, Africa imports between 70 and 90 percent of the drugs it consumes.
According to the ministers, support to the non-public sector will enable local continental production of pharmaceutical products, create more jobs, and ensure a guaranteed supply of essential medicines.
They added that joint protocols were needed on border closures to permit for trade and humanitarian corridors. They stressed the necessity for liquidity, refinancing, and guarantee facilities to support the private sector.
While calling for the cover of the African airlines, logistics, and tourism industry suffering from the pandemic, the finance ministers stressed on the effective use of data and communication technology to manage the crisis.