Africa needs $285bn to tackle COVID-19- IMF

The International Monetary Fund (IMF) has projected that African countries would require $285 billion to tackle COVID-19 pandemic currently ravaging the global community, in the next four years.

This is as President Muhammadu Buhari, as part of strategies to shore up finance for Africa, especially the low-income countries, has made case for international finance institutions to approve 25-30 percent of unused Special Drawing Rights (SDR), for poorer countries.

The president also called for fair distribution of the coronavirus vaccines across all countries, irrespective of region.

Buhari, while contributing to debates at the ongoing African finance summit holding in Paris, France, on Tuesday, described the 5.12 percent, or SDRs 33b out of SDR500 billion, approximately, $650 billion that will go to African countries, as “ inadequate” to cope with the growing financial stress facing the continent.

He appealed to the French government to support initiatives for “fair and equitable allocation of the vaccines especially for African counties, comprehensive financial support for the setting up of vaccine manufacturing in Africa, as well as achieve vaccination target in the continent.

Managing director of the International of the IMF, Kristalina Georgieva, in her contribution to the ongoing African Finance summit in Paris, France, on Tuesday, however, said the continent must be assisted by its friends to “return to the remarkable development progress witnessed before the global coronavirus pandemic”.

She noted that the situation requires urgent response to enable the continent take full advantage of the tectonic shifts in the global economy toward digital-driven, low-carbon and climate resilient growth.

The global pandemic had caused recession and shrunk in the continent’s Gross Domestic Product GDP, by 1.9 percent – the worst performance on record.

“There is urgency to focus on financing Africa. This year, we project global growth at 6 percent, but only half that-3.2 percent for Africa. “This is a dangerous divergence. It ought to be the reverse”

She posited that Africa needs to grow faster than the world at the rate of 7 to 10 percent to meet the aspirations of its youthful populations, and become more prosperous and more secure.

“Yes, together we have avoided a much worse economic crisis. Now, we must build on this initial momentum to bring the pandemic to a durable end and boost growth in Africa”

She declared that Africa will need additional financing of $285b to adequately respond to the COVID through 2025.

“Of this, $135 billion is for low-income countries. This is the bare minimum. To do more – to get African nations back on their previous path of catching up with wealthy countries – will cost roughly twice as much. We are releasing a note today with further details.

The IMF boss expressed the hope that although these may seem out of reach, they can be achieved. “But to quote Nelson Mandela: impossible until it is done”

The IMF outlined three immediate steps which include targeting vaccinating of at least 40 percent of the population of all countries by the end of 2021, and at least 60 percent by mid-2022.

“The economic case is overwhelming: for a cost of $50 billion, faster vaccination can result in higher global output of $9 trillion between now and 2025. This would require, among other priority actions, donation of 500 million vaccine courses in 2021 from countries with excess supply. And it requires boosting vaccine production capacity by 1 billion doses in early 2022.”

The second include bilateral and multilateral development financing for increased grants and concessional loans

She disclosed that the last year, the IMF swiftly ramped up our financing for the continent, including providing 13 times our average annual lending to sub-Saharan Africa, adding that it is working to “ do more”

“We recognize exceptional times call for exceptional measures. Our membership backs an unprecedented new allocation of Special Drawing Rights of $650 billion – by far the largest in our history. Once approved, which we intend to achieve by the end of August, it will directly and immediately make about $33 billion available to our African members. It will boost their reserves and liquidity, without adding to their debt burden.”