Africa Taking Charge: $3B COVID-19 Economic Relief Package & Request for Debt Relief
A day before the U.S. Senate reached a $2 Trillion COVID-19 relief deal, Africa’s foremost Pan-African financial institution, The African Export-Import Bank, announced a $3billion COVID relief package to similarly aid African countries in dealing with the economic and health impacts of the COVID-19 pandemic.
The institution wrote the following in its communique on the package:
[The money] will support central banks, and other financial institutions to meet trade debt payments that fall due and to avert trade payment defaults, said Afreximbank. It will also be available to support and stabilize the foreign exchange resources of central banks of member countries, enabling them to support critical imports under emergency conditions.
In addition, PATIMFA will assist member countries whose fiscal revenues are tied to specific export revenues, such as mineral royalties, to manage any sudden fiscal revenue declines as a result of reduced export earnings. It will also provide emergency trade finance facilities for import of urgent needs to combat the pandemic, including medicine, medical equipment, hospital refitting, etc.
For the last month, pundits have reiterated that Africa’s mounting debt and tanking commodity prices, ie. oil and non metal minerals, will devastate African economies. With rising numbers of Corona virus cases on the continent, they are all but sure that African economies, and inevitably its COVID-19 response, will tank. Recent headlines read:
“Opaque Oil-Backed Loans Could Fuel Next African Debt Crisis” - Forbes
“How debt burdens could cripple Africa's COVID-19 response” - DevEx
It is thus comforting that African institutions and agencies such as The African Export-Import Bank are responding and providing much-needed liquidity and financial support during this time.
It is also noteworthy that African leaders, led by Ethiopian Prime Minister, Abiy Ahmed, are leading the call for debt relief and aid support that would very much change the health and economic impacts of this virus on the continent via removing debt obligations that would very much stand in the way of effective COVID-19 response.
The Prime Minister clearly outlined his 3 point proposal to the G20, WHO, IFC, among others, a few days ahead of the G20 virtual summit. He shared:
The World Bank and IMF have since taken note of P.M. Ahmed’s proposal and have lent their support. Although this part of the work is now contingent on the G20 ie. waiting on their response, P.E. Ahmed’s bold proposal, coupled with the relief committed by the Afreximbank, and what individual African countries will soon commit to their own countries and others, are commendable acts of Africa’s agency that should not be ignored! Africans are leading a forceful charge by proposing bold, innovative solutions that will see us through!
