The United Nations Economic Commission for Africa has urged African countries to adopt policy measures that encourage green investments aimed at increasing productivity to facilitate a durable recovery from the coronavirus crisis and achieve sustainable industrialization.
This was said by Hopestone Kayiska Chavula, Officer In-Charge of the Macroeconomic Analysis Section in the think tank’s Macroeconomics and Governance Division, at the beginning of the 39th ECA Committee of Experts of the Conference of African Ministers of Finance, Planning and Economic Development meeting this week.
Mr. Chavula, in his report focusing on recent economic and social developments in Africa, said countries also need to support small to medium scale enterprises (SMEs) and strengthen social protection systems to revitalize livelihoods.
“Strengthening health systems, including through the establishment of regional state of the art health centres is also critical,” he said, adding countries also need to build on and strengthen existing monitoring and evaluation and statistical systems to continually assess and refine mitigation and recovery measures.
“There is need for support from the international community to address liquidity constraints and promote recovery,” said Mr. Chavula. This can be done through new issuance and reallocation of Special Drawing Rights (SDRs), lower cost of credit, orderly debt restructuring and recapitalization of Multilateral Development Banks (MDBs).
He said COVID-19 had significantly affected social and economic development progress on the continent.
“Much of the progress achieved in recent years in education, health and poverty eradication has been halted or reversed by the COVID-19 pandemic,” Mr. Chavula said, adding the ECA estimates that between 49-161 million people will fall into deep poverty as a result of the crisis.
Africa’s GDP is estimated to have contracted in 2020 despite a recovery in the 3rd and 4th quarters of 2020 with a positive 2021 outlook.
Fiscal deficits have widened due to increased government expenditure to halt the spread of the pandemic, with many more African countries at risk of debt distress as a result.
Accommodative monetary policies have been maintained to cushion the negative effects of the pandemic on economic activity despite inflationary pressure in some countries, said Mr. Chavula.
African trade declined but is expected to increase with the implementation of the African Continental Free Trade Area (AfCFTA).
“Access to concessional financing will be vital in restoring lives and livelihoods and regaining momentum towards achieving the sustainable development goals and Agenda 2063,” said Mr. Chavula.
Real GDP growth remained subdued on the continent mainly due to the downside risks associated with the second wave of infections, lower commodity prices and significant fiscal risks as well as conflicts in some countries.
The year 2021 looks positive, Mr. Chavula said, due to the availability of COVID-19 vaccines and improved economic activity in the 4th quarter of 2020, holiday and travel expenditure.
On risks and uncertainties, he said the second wave of infections, expansionary fiscal measures and rising debt levels posed downside risks to many African countries’ growth. Post-election instability and social unrests, which may in part have emerged from pandemic-related economic hardships and lockdown fatigue, have induced uncertainties in some countries.
Climate change risks, particularly as several countries are at high risk of extreme weather events, could also undermine economic growth, according to Mr. Chavula.
On the other hand, the pandemic has created an opportunity for climate resilient green growth as an opportunity to drive recovery.
The theme of this year’s Conference of Ministers is ‘Africa’s Sustainable Industrialization and Diversification in the Digital Era in the Context of COVID-19’.