In the face of the dramatic economic impact COVID-19 is expected to have on Africa, international organisations have made pledges and African ministers have called for a $100bn emergency funding package. African Business summarises the most recent developments
Economists and experts are already saying that the impact of the current COVID-19 pandemic will be a lot deeper than during the last global economic shock following the financial crisis of 2008 and will require bolder, rapid and bigger action to avert a prolonged downturn.
A number of African and international organisations have already made pledges and offered lines of finance to different countries. Here’s a summary of what’s been done to date:
UN Economic Commission for Africa, on behalf of African Ministers of Finance – $100bn Emergency Financing Package for Africa
The secretary general of the UN has called for a $2.5 trillion rescue package for developing countries to help them weather the shock and avert deaths from poverty.
In an online meeting hosted by the UN Economic Commission for Africa on 31 March, African finance ministers called on the World Bank, the IMF and other international bodies to provide a $100bn emergency financing package for Africa. This would be to help provide medical assistance; debt relief and forbearance of interest payments over a two to three-year period for all African countries, low and lower middle income alike ($44bn); budgetary assistance to cushion fall in commodity prices; and financial assistance to prop up hospitality and other sectors that will have been hit hard from the synchronised global economic slowdown.
They mentioned that a further $50bn may be needed for the building back process in 2021, including continued stay on interest repayments.
They have set a deadline of 12 April for these measures to be agreed and put in place.
President Macron joined a call with a number of African heads of state on Friday. It is anticipated the French president will take the lead on this for the international community to develop a $500bn package for the developing world.
African Development Bank – $3bn social bond
The Bank issued a $3bn social bond last week, the biggest of its kind. This exceptional $3bn, was launched to alleviate the impact of COVID-19 on Africa’s economies and livelihoods.
More measures will be announced as the situation unfolds for specific programmes and countries, both in terms of budgetary support and also emergency financing.
The African Export Import Bank – $3bn financing facility
Afreximbank announced a $3bn facility to provide financing to assist member countries to adjust to the financial, economic and health services shocks caused by the COVID-19 pandemic. It will support member country central banks, and other financial institutions to meet trade debt payments that fall due and to avert trade payment defaults. It will also be available to support and stabilise FX resources of central banks, enabling them to support critical imports under emergency conditions.
It will also provide emergency trade finance facilities for import of urgent needs to combat the pandemic, including medicine, medical equipment, hospital refitting, etc.
The facility will be available through direct funding, lines of credit, guarantees, cross-currency swaps and other similar instruments, according to Afreximbank.
The World Bank – $160bn Emergency Coronavirus Support, including $14bn fast-track package and an $8bn private sector assistance package through the IFC
The World Bank Group expects to deploy up to $160bn over the next 15 months to help countries protect the poor and vulnerable, support businesses, and bolster economic recovery. This is a global response, not just for Africa.
In the short-term, they are making available $14bn fast-track package. Twelve countries in Africa have already received short-term assistance (Cabo Verde; DRC; Egypt; Ethiopia; Ghana; Kenya, Mauritania; Morocco; São Tomé e Principe; Senegal; Sierra Leone; The Gambia).
The IFC, the private sector arm of the World Bank, is providing $8bn in financing to help private companies affected by the pandemic and preserve jobs.
The International Monetary Fund – $50bn Rapid-disbursing Emergency Financing Facility
The IMF is said to be able to mobilise up to $1tn of lending capacity.
It says that 85 countries have already reached out to it for disbursements related to COVID-19. The IMF has already made a number of emergency disbursements to African countries to help them address the pandemic, including $166m to Madagascar on Friday and $109m to Rwanda the day before.
The Trade and Development Bank
In a statement issued on Thursday the bank said it would support eligible Member States to procure essential medical supplies, as well as supporting financial institutions in the region facing liquidity challenges. As one of the COMESA region’s leading institutions, the bank will provide facilities to support its corporate clients with access to supply chain and necessary inputs. They expect to scale-up support to the region by working with global funding partners via risk-sharing agreements and co-financing.
The European Union
The EU has granted €450m to Morocco and €250m to Tunisia to help them with their emergency fiscal packages.
In their call for international action on 31 March, the African finance ministers also called for the EU to use its guarantee and refinancing facilities, which amount to more than $7bn, to support trade credits and guarantees and debt and interest rescheduling for the private sector. This could be done, they said, as part of the already announced liquidity facility of the European Central Bank, with support from the European Investment Bank and through other bilateral mechanisms.