Much as the African continent has escaped the worst of the Coronavirus pandemic so far, its implications could have worse effects than in any other continent. The continent has the world’s weakest health and economic systems, and a population where the majority of the people are living below the poverty line. Over 377 million people in Africa survive on $3.20 or less a day, representing over 70% of the world’s poorest population.
With such sobering statistics, the COVID19 curve should have been flattened yesterday.
To achieve this goal, extreme measures have to be put in place by legislators which will inevitably impose hardships in terms of financing these economies. Strong structural components such as value-addition, industrialization, and knowledge-intensive structures should be put in place.
The most vulnerable group of people in these economies are women and the youth who are employed in the rudimentary agricultural sector and small scale entrepreneurship in the rural arrears and urban outskirts of the African countries. These people rely on their daily income to sustain their families’ livelihoods, making saving and affordability of health insurance a mere luxury.
The challenge in such emerging economies of Africa is that governments cannot give relief to cushion income and job loss as they intend because even with their mere annual operations, grants and loans from the richer countries are the order of the day.
How can the African governments respond?
- Petitioning for debt-relief.
The IMF and the World Bank have called upon global creditors such as China to suspend debt payment for low-income countries especially those in Africa. China is Africa’s biggest creditor with over $145billion of loans and grants income to Africa. On 18th JUNE 2020, the Chinese President, Xin Jinping pledged to cancel debts for relevant African countries. Countries like Rwanda, Kenya, and Uganda that largely depend on agriculture have seen a sharp fall in their agricultural commodities on the global market thus low export revenues. Operating in such deficits makes the capability to pay back loans extremely hard, and with an already existing underlying threat such as COVID19 debt payment is the least of priorities. In Uganda, there is has been a hanker by Parliament asking the government to limit expensive loans which pose risks for future debt payments.
- Creation of Pan-African Economic initiatives.
Just like in Europe where the European Union (EU) leaders agreed to €750 billion in a recovery effort to help Europe tackle the COVID19 crisis, African countries should be in position to pick a leaf. The African Union (AU) has created an AU COVID Response Fund that aims to solicit resources to strengthen the continent’s response to the pandemic. The AFRICAN EXPORT-IMPORT BANK (Afrieximbank) and EU have also granted $3 million and €10 million respectively towards the implementation of the African Joint Strategy for the covid19 outbreak. These funds will be used to mitigate the social, economic, and humanitarian impact of covid19 as well as boost the capacity of Africa to support its response to public health emergencies across the continent.
- Digitalization of Africa’s economies.
The outbreak of COVID19 in Africa has redefined the rudimentary commerce of Africa. A need for strong digital transformation will improve Africa’s economies and also become a tool to measure economic growth. In the face of the pandemic, the economies were on the verge of collapse, majorly because trade had been restricted. In Uganda, Airtel, one of the country’s largest communication networks has been able to avail international money transfer services as well as partner with various commercial banks to offer USSD code and app services like bank to wallet services, payment of bills and micro-credit facilities that can be accessed by just one tap on your mobile phone.
- Increased industrialization and support of the local industries.
Following the lockdown, every country on the continent became inevitably an island with restricted border movements. Self-sustainability was inevitable thus a sluggish spring of industries especially those in the production of essential commodities. In Uganda, the government has put up value addition structures as well as subsidization of these industries not forgetting the agricultural sector, the country’s biggest GDP contributor.
The African Development Bank (AfDB) has also been supporting companies in the agricultural sector across the region such as the Moroccan phosphate company in Morocco to increase the production of OCP that is used as an agricultural fertilizer.
The world is facing a period of distress in the face of the pandemic. It is therefore upon the African governments to implement achievable mitigating structures to curb this crisis. The vulnerability of Africa now, more than ever needs to be addressed for the well-being of these millions of people that is at stake.