Economic impact of coronavirus in Africa means debt relief needed, Christian Aid says

Economic impact of coronavirus in Africa means debt relief needed, Christian Aid says

A man wearing face masks to protect against coronavirus, runs past a mural on the street in downtown Johannesburg, South Africa, Thursday, April 9, 2020. South Africa and more than half of Africa's 54 countries have imposed lockdowns, curfews, travel bans or other restrictions to try to contain the spread of COVID-19. (Credit: Themba Hadebe/AP.)

As Africa struggles with the COVID-19 coronavirus pandemic, the continent’s governments will have to make hard choices: Keep servicing its debts and compromise the lives of their people or stop debt repayments to redirect resources for emergency response.

YAOUNDÉ, Cameroon – As Africa struggles with the COVID-19 coronavirus pandemic, the continent’s governments will have to make hard choices: Keep servicing its debts and compromise the lives of their people or stop debt repayments to redirect resources for emergency response.

Although Africa still records the lowest number of infections and deaths from the coronavirus, the economic fallout, in the words of Christian Aid’s Head of Humanitarian Programs for Africa, Maurice Onyango, “really huge.”

Christian Aid is an inter-denominational international relief agency based in the UK.

“Let me just give you snippets of what we are already seeing: Countries are already locking down and we are seeing so many people are going jobless as a result, because in most of the African economies, the informal sector is leading in employment, and when you stop movements in lockdowns, you end up making so many people lose their jobs,” he told Crux.

He noted industries such as aviation, hospitality, and tourism have virtually shut down, and that translates into “thousands and thousands of jobs that are lost.”

The African Development Bank had initially projected the continent’s Gross Domestic Product to grow by 3.4 percent this year, but an African Union study entitled “Impact of the coronavirus on the Africa economy” shows the economy sinking by between 0.8 percent and 1.1 percent, according to Reuters, which obtained a copy of the report.

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The study further indicates that up to 15 percent of foreign direct investment could disappear. In addition, exports and imports could drop by 35 percent from the 2019 levels, translating into a loss in the value of trade of around $270 billion.

In the face of this economic disaster, governments still have to find an estimated $130 billion to fight the COVID-19 pandemic.

In this climate, many national leaders are looking uneasily at their country’s debt burden. As of 2017, 19 African countries had exceeded the 60 percent debt-to-GDP threshold set by the African Monetary Co-operation Program (AMCP) for developing economies, while 24 countries surpassed the 55 percent debt-to-GDP ratio set by the International Monetary Fund.

Onyango said making payments on the debt at the moment – as opposed to spending the money to counter the pandemic – would be devastating to the continent.

“Most of our African countries have very fragile health systems, fragile educational systems, they have very fragile social safety nets, and already the pandemic is having huge, huge negative economic impacts,” he said.

Jobs are being lost, the GDPs are going down and issues to do with trade aren’t happening the way they should. Tax revenues are not there. So it is really logical that the countries that have provided some of the loans should reconsider how to ease the burden, so that these countries can reinvest some of the money that they use to service debts back into their economies, back to the peoplewith this crisis,” Onyango continued.

“If they are allowed to still continue servicing some of these debts, it would mean that they have to cut services in healthcare, cut services in social welfare, in education and that kind of thing, because the revenue itself will not be there to service debts and at the same time, provide social services to citizens. That is why we are emphasizing that debts should be cancelled for African countries, and other parts of the world that are also heavy in debt,” he told Crux.

He said Christian Aid will continue to lobby donor governments to waive Africa’s debts by just presenting the case in terms of the challenges the countries are facing.

Onyango said the COVID-19 pandemic shows that all humanity has a common future, and the virus respects neither geography, social status, race nor political standing.

“The COVID-19 has shown us that our futures are bound together as humanity, and we have to have a collective response,” he told Crux.

“If the outbreak ends in America but doesn’t end in Kenya, or in Zimbabwe, we are still going to have the same problem of reinfection and counter-infection. It means that we have to have one, concerted effort to really eradicate this disease,” he continued.

Noting that the outbreak has also revealed gross inequalities in terms of access to basic services, he called for the establishment of “systems that are very just, systems that help the very vulnerable, systems that don’t leave anyone behind …because humanity is bound together, and we have to go forward as one, and make sure that we don’t leave anyone behind in the future. “

Onyango said Christian Aid was working to minimize the health impacts of the COVID-19 in the countries in which they work. He said they are working with faith leaders and other partners to raise awareness on the virus, “tackling issues of misinformation and making sure that people are taking the precautions to reduce the spread.”

These precautions include respect for basic rules of hygiene, as well as awareness on physical spacing. He said work is also being done to reduce the economic effects, “because COVID-19 is not just a health pandemic, it has very huge impacts on poverty.”

In his Urbi et Orbi address at Easter, Pope Francis also called for the reduction or forgiveness of the debts owed by poor nations, so that they will be in a better position to “meet the greatest needs of the moment.”

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