Without a firm decision on Africa’s $700bn external debt, the continent’s economic recovery will be delayed and financial market stability affected in the short and medium term.
The African Development Bank made the submission on Wednesday as it played host to a global coalition of public development banks, to brainstorm on joint actions that could help boost a strong and inclusive recovery for the continent.
The meeting was co-organised by the African Association of Development Finance Institutions in collaboration with the International Development Finance Club.
According to AfDB, the pandemic has negatively impacted the debt situation for African countries.
“The Covid-19 pandemic has led to an unprecedented global health and economic crisis, affecting African economies, particularly sub-Saharan Africa.
“A historic recession of 2.1 per cent, the largest contraction for the sub-Saharan region in more than half a century, is threatening gains made over the last decade and attainment of the UN Sustainable Development Goals,” AfDB said.
Financial Street recalls that as part of its efforts to mitigate the macroeconomic shocks for African countries, the AfDB had announced a $10bn Covid-19 Response Facility as well as a $3bn social bond to support its pandemic funding efforts.
The AfDB President, Dr Akinwumi Adesina, who expressed concern over the debt profile, said, “Think of the impact that this debt is having: in 2019, Africa paid $221bn for debt service, which is 44 per cent of the total government revenue of $501bn in the same year.”
The global coalition meeting held on Wednesday (today) was used to emphasise the urgency and immediate resources needed for Africa’s post-Covid 19 recovery.
There was a commitment by the public development banks to deepen cooperation to boost investment opportunities across the continent.
In a remark, Adesina, said, “The African Development Bank is strongly supportive of public development banks.
“As public development banks, we must deepen our ability to reach all parts of Africa. To ensure financial inclusion, especially for the unbanked, and expand access to finance, savings and insurance products and services, we need to work as one unified system.
“Public development banks must strengthen their capacity to deepen domestic capital markets and stock exchanges.”
The AfDB president added that this would hasten access to financing and unlock new opportunities for the continent.
Chairperson of IDF Club, Rémy Rioux, said, “African challenges, more than anywhere else, require us all to go seek coordinated responses and actions. Because in Africa, we need to leave no one behind.
“Let’s finance in common and build now a common and positive story of innovation and investment in Africa, leveraging official development assistance and mobilising all willing stakeholders. The days of pure aid are over. Africa is ready for sustainable investment.”
Public development banks and partners which participated in the panel discussions include the Association of European Development Finance Institutions, African Export-Import Bank, Agence Française de Développement, Development Bank of Southern Africa, European Commission, and European Bank for Reconstruction and Development.
Others were European Investment Bank, Foreign, Commonwealth and Development Office, International Development Finance Club, KfW Development Bank, Trade and Development Bank Group, and West African Development Bank.
