We are living in the most uncertain times for humanity since the Second World War. It is not an exaggeration to imagine that just like the immediate aftermath of that seminal global catastrophe resulted in a fundamental re-ordering of world affairs, the post-pandemic world order will be a radically altered one. Obviously, the immediate and most important question that is occupying the minds and efforts of global leaders and citizens everywhere is that of surviving the present crisis. This is exactly as it should be. The pace and extent of the rapid response efforts being deployed globally have been impressive to observe, a testament to the underlying survival instinct and fundamental goodwill of humans everywhere.
But not all fingers are equal. Some response options (ranging from a trillion-dollar economic stimulus programs to universal cash hand-outs and rapid roll-out of hospital infrastructure) are simply not feasible or available to the leadership and people in the poorest parts of the world. Substantially all the countries in Africa fall into this latter category, and it is not yet clear what the credible paths to containment, mitigation and widespread treatment availability will be for us on the continent. As I am not a healthcare expert or medical professional, I will refrain from sharing any views on the response options for dealing with the public health crisis triggered by this pandemic. However, I am optimistic that a credible path forward will be discovered and implemented soon enough, deploying a mix of the more accessible response tools being developed and utilised everywhere in the world (testing, masks, sanitary practices, social distancing, therapeutics and ultimately vaccination).
One thing that is already clear however, is the emerging scale of the unprecedented damage that this pandemic has wrought on the global economy. Here in Africa, where we are still largely sustained by commodity exports while struggling to develop globally competitive local production capacity, the impact will be even worse. For millions of Africans already living in extreme poverty or struggling to make ends meet, the economic consequences are not abstract, but a matter of life and death.
It is therefore useful for leaders and citizens alike to begin thinking about what the most appropriate policy responses should be, and what kinds of international economic partnerships we should be advocating for. Already, talk is rife about debt forgiveness, write-offs or moratoriums on outstanding sovereign loan and bond obligations (ostensibly to provide African governments with some fiscal headroom to address the crisis). Some of the ideas being promoted are complex and quite involved to implement, with potential adverse consequences for sovereign credit ratings, future financing costs and international geopolitical rivalry.
But beyond historical sovereign debt, there is another (possibly more important) issue to consider, and that is enhancing the future capacity of Africa to maintain its access to international capital for development. We already have a sense for the significant damage that is being done to trade flows, business conditions and fiscal balances in our economies. How are we going to maintain Africa’s capacity to attract desperately needed international capital and expertise in these difficult times to come? This is one of the most important questions that must be answered, if Africa is to meet the challenge of the post-pandemic era. The good news is that there is no shortage of potential solutions. The key issue is for African leadership and citizens to rally around the best ideas.
As someone working in infrastructure finance, I can think of no better method for creating a massive post-pandemic economic stimulus in Africa (and catalysing a boon in private investment and employment) than bringing to life an ambitious program of international aid for African infrastructure development. The critical infrastructure projects that need to be built in Africa (hospitals, dams, potable water and sanitation, roads, irrigation systems, power plants, pipelines, seaports) are already well-known. However, the fiscal wherewithal and organisational capacity required to implement them are probably now at an all-time low. What if this global crisis were to result in a rare convergence in international goodwill (alongside unprecedented financial generosity) and local political commitment to cut through the normal bureaucratic obstacles (on both sides) to implementing such projects? Africa cannot (by itself) carry the financial burden of development in these difficult times, whether as sovereign governments or individual citizens.
Further, under current conditions, foreign investment will simply not bridge the gap. International support must be actively sought. But the form of support is also important. Hand-outs and concessional loans to governments have not really served us best in the past and are unlikely to now become efficient service delivery mechanisms under present circumstances.
There is however one established approach that has worked with great efficiency in the past and with strong advocacy, might be easily re-purposed to meeting the current challenge. Export credit insurance from agencies backed by the sovereign credit standing of wealthy foreign governments has proven to be an effective mechanism for transferring long-term, international private capital, technology and operational expertise into the successful delivery of projects in Africa. Clearly, the historical raison d’etre of these (essentially) policy institutions has been for the promotion of exports, technology and services from rich foreign countries to be purchased by developing market sponsors. Yet, the same private-sector led project financing rigor upon which ECA financings depend might be applied to an ambitious new policy objective: securing massive foreign aid (rather than debt) in direct support of high-impact infrastructure projects in Africa, in response to the economic consequences of an unprecedented global pandemic.
After the current chaos, a new world order will emerge. Africa must be proactive in forming the international diplomatic partnerships necessary for advocating its best economic interests in this re-ordering of global affairs. Humanitarian aid to meet the immediate public health and disaster relief challenge is important, but it will not be enough. Relief from past debt burdens is a noble idea, albeit with potentially problematic consequences. A private-sector led, policy-backed framework for coordinating transfer of large amounts of private capital alongside significant technological expertise into Africa from the developed world already exists. Should African leaders not be leading the political and diplomatic advocacy to re-purpose this critical tool for kickstarting the post-pandemic recovery?
FOLA FAGBULE
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