Africa hopes for new global loan deals

Wednesday, May 19th, 2021 00:00 |
African leaders pose for a picture before the opening session of the Summit on the Financing of African Economies on May 18, 2021 in Paris.

French President Emmanuel Macron Tuesday hosted African leaders and global financial institutions for a summit seeking to provide Africa with critical financing after the Covid-19 pandemic depleted the continent’s coffers.

Africa has so far been less badly hit by the pandemic than other global regions -- with a total of 130,000 dead across the continent, compared with 3.4 million worldwide.

But the economic cost is only too apparent, with the International Monetary Fund warning in late 2020 that Africa faces a shortfall in the funds needed for future development -- a financial gap of $290 billion up to 2023.

While richer countries are running major economic recovery programmes, Africa “does not have the financial means today to relaunch its economy,” Finance Minister Bruno Le Maire told RFI radio.

He warned against the risk of a “great economic divergence between Africa, which would go backwards, while the United States, Europe and Asia recover strongly”.

Many want a moratorium on the service of all external debt until the end of the pandemic.

“We are collectively in the process of abandoning Africa by using solutions that date from the 1960s,” Macron said last month, warning that failure would lead to reduced economic opportunity, sudden migration flows and even the expansion of terrorism.

International financial leaders attending include IMF chief Kristalina Georgieva and World Bank managing director of operations Axel van Trotsenburg.

Serge Ekue, the president of the West African Development Bank (BOAD), told AFP that Africa needed much longer loan maturities going beyond seven years and interest rates of 3.0 per cent rather than 6.0 per wcent.

“In West Africa, the average age is 20. You walk in (Ivory Coast’s economic capital) Abidjan and there is incredible energy,” he said, noting that Africa had seen growth rates of five to six percent in the last years.

“The issue is therefore not so much a moratorium as obtaining low rates. Because it is better to issue new, cheaper and longer debt than to obtain a suspension,” he said.

Togo President Faure Gnassingbe announced that his country had secured an additional $240 million package from the IMF.     -AFP

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