There is a real danger of the world experiencing a two-speed recovery from the Covid-19 pandemic – with Africa lagging behind.
Heads of international development institutions held a closed-door session with German Chancellor Angela Merkel last week to discuss the uneven global economic recovery, access to vaccines, and strategies to drive a recovery from the Covid-19 crisis.
Merkel was joined by the heads of the African Development Bank, World Trade Organisation, the International Monetary Fund (IMF), the World Bank, the Organisation for Economic Cooperation and Development (OECD), and the International Labour Organisation (ILO).
“We have noted that the recovery after the pandemic is a two-speed recovery, which is cause for concern,” Chancellor Merkel says.
The German leader add that the G7, IMF and World Bank continue to take measures to assist lower- and middle-income countries. She points to the IMF Special Drawing Rights and the importance of channeling them in a way that benefits the world’s poorest countries.
Highlighting the IMF’s projection of 6% global growth in 2021, IMF MD Kristalina Georgieva says: “The composition of the 6% is changing, with advanced economies broadly accelerating growth, whereas most emerging markets and developing economies are falling further behind. This is a dangerous divergence.”
The consequences of the disparity include continuing supply chain disruptions and the risk of giving up hard-won gains in development, which would fuel unrest and instability.
Georgieva concludes that vaccines remain the number one priority today. World Bank President David Malpass reiterates this, saying progress was made under the African Vaccine Acquisition Trust (AVAT) initiative of the Africa Centres for Disease Control and Prevention, but advanced economies still need to make doses available to the rest of the world.
On debt relief, Malpass comments: “I have actively advocated for more transparency with regard to debt, as well as a greater balance within the debtor/creditor relationship around the world.”
Addressing Africa’s economic prospects, African Development Bank President Akinwumi Adesina says the continent’s economies were forecast to grow by 3,4%, and the IMF special drawing rights are invaluable in facing down economic headwinds.
“The recent IMF release of $650-billion in SDRs, with $27-billion to Africa, will go a long way in helping to boost reserves for developing countries,” he says. “If the developed countries reallocate $100-billion of SDRs to Africa, as agreed at the Paris leaders meeting and by the G7, that will further support faster economic recovery in Africa.”
ILO Director-General Guy Ryder says the impact of the pandemic on labour markets was four times greater than the 2008-2009 financial crisis. “We’ve recovered perhaps half of the damage done in terms of work being done, but all of us agree that the recovery process is incomplete, uneven and fragile.”
The meeting took place a day before a Compact with Africa conference, a G20 initiative that promotes private investment in Africa. It involves reform of the continent’s macroeconomic, business and financing frameworks.