Africa needs $285b for COVID-19 responses in 4 yrs – IMF

…advocates reforms in taxation

By Zayamu Hassan

The International Monetary Fund (IMF) has disclosed that Africa needs an estimated additional $285 billion for adequate COVID-19 responses from now till 2025.

The IMF Managing Director, Kristalina Georgieva, who stated this at the Summit on the Financing of African Economies, said out of this figure, $135 billion is for low-income countries, which is the bare minimum.

She, however, said that reforms of international taxation can also support Africa’s growth.

“To do more – to get African nations back on their previous path of catching up with wealthy countries – will cost roughly twice as much. We are releasing a note today with further details.

“These are large numbers. They may seem out of reach. But to quote Nelson Mandela, it is impossible until it is done.”

She regretted that last year, the COVID-19 pandemic-caused recession shrank the GDP of the African Continent by 1.9 percent – the worst performance on record.

“This year, we project global growth at 6 percent, but only half that – 3.2 percent – for Africa.

“This is a dangerous divergence. It ought to be the reverse:  Africa needs to grow faster than the world – at 7 to 10 percent – to meet the aspirations of its youthful populations, and become more prosperous and more secure,” Georgieva. 

Three areas to act, according to her, include, first, end the pandemic everywhere by targeting to vaccinate at least 40 percent of the population of all countries by the end of 2021, and at least 60 percent by mid-2022.

The second area to be considered, Georgieva noted, is bilateral and multilateral development financing, insisting that grants and concessional loans – ought to go up.

“Today, we will have a chance to hear from Africa’s development partners. Let me set the stage and talk about how we at the IMF will do our part.

“Over the last year, we have swiftly ramped up our financing for the Continent, including providing 13 times our average annual lending to sub-Saharan Africa. And we are working with our membership to do much more. We have received support to increase access limits so we can scale up our zero-interest lending capacity through the Poverty Reduction and Growth Trust.”

She further revealed that: “Our membership backs an unprecedented new allocation of Special Drawing Rights of $650 billion – by far the largest in our history. Once approved, which we intend to achieve by the end of August, it will directly and immediately make about $33 billion available to our African members. It will boost their reserves and liquidity, without adding to their debt burden.

The IMF boss further stated that she has confidence in building the source of low-cost financing to meet the substantial needs of Africa, including for vaccines.

While noting that these efforts needed to be complemented by debt relief, she said strong efforts are needed to make the Common Framework for debt resolution fully and rapidly operational.

The third area, she reiterated, is what she described as, actions at home.

New IMF research, according to her, highlighted that domestic and international investors could provide at least three percent of GDP per year of additional financing by the end of this decade.

She, therefore, called on leaders to step up, saying: “We know all too well from history what a shock of this magnitude can do if not countered forcefully and effectively – it can lead to a lost decade.”