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What does COVID-19 mean for Africa?

Challenges, but also opportunities

by Maureen Were, Milla Nyyssölä

The COVID-19 pandemic has led to an exceptional social and economic crisis all over the world, with Africa among the hardest-hit regions. What are the most acute challenges facing the continent during and after the pandemic? What are the emerging opportunities to be seized? A two-day online conference hosted by UNU-WIDER on 11-12 February brought together over 200 attendees and eminent speakers to find answers to these questions.

In her opening keynote address, Dr Vera Songwe, Executive Secretary of UNECA, provided detailed insights into the development challenges posed by the pandemic, laying the ground for the subsequent sessions on economies, livelihoods, and welfare. The conference closed with a policy panel on Africa’s ‘new normal’ and future development, with concrete examples of measures for supporting recovery.

The pandemic is not over

A key takeaway for us from the conference is that the pandemic is not over, and African countries will need continued global support to address the health and economic crisis. These shocks add to pre-existing development challenges, including climate change.

Many African countries responded effectively to the first wave of the pandemic. However, 2021 will likely bring even more severe social and economic consequences, given the new mutations of the virus and the rising number of casualties, the global economic slowdown, and the rising debt burden. The economic costs of containment measures against the virus have been felt especially by the poor and people working in the informal sector.

The conference discussions clearly pointed out the need for Africa to mobilize both domestic and external resources to effectively respond to the crisis. Achieving the Sustainable Development Goals by 2030 — which is estimated to cost about USD 1.3 trillion a year — will depend on innovative financing, private investments, and financial support from donors. To fund long-term development, African countries should leverage more on domestic capital markets, given the vast liquidity that exists in domestic financial markets in several countries.

Rising debt across the region is a pressing issue, one that needs to drive a rethink of the international financial structure. For example, many African countries face much higher interest rates on private and commercial debt compared to other regions. Solutions should involve all creditors, including non-Paris Club members.

Adapting to a new normal, looking ahead to the future

Despite the challenges, the second important message for us from the conference is: the COVID-19 pandemic has presented new opportunities for African economies.

One positive outcome has been the intensified co-ordination between development partners and donors. Examples of rapid international response include the Debt Service Suspension Initiative (DSSI) by the G20, and the COVAX initiative that aims to guarantee fair and equitable access to COVID-19 vaccines globally. Multilateral institutions such as the African Development Bank and the World Bank have also provided additional financial support to African countries. Nonetheless, more resources will be needed, especially for humanitarian aid, debt relief, and vaccines.

To aid the recovery, there are several emerging opportunities that African economies can tap into. These include increased domestic investment in sectors such as pharmaceuticals, textiles, and apparel, given the demand for medical and protective equipment, as well as increased value added in local production of goods and services. A growing ability and capacity to innovate is also being witnessed in several countries.

Another positive signal has been the resilience shown by the intra-African trade compared to trade with the rest of world. The African Continental Free Trade Area (AfCFTA), highlighted by several conference speakers, has a great potential to boost African economic growth through more effective internal and intra-Africa trade in the future.

An opportunity not to be lost is the potential of digital technology and the information and communication technology sectors in fast-tracking Africa’s recovery. During the pandemic for example Kenya has witnessed a major shift towards a digitalized economy, use of digital finance, and electronic payment platforms.

Recovery needs a long-term strategy

Africa’s digital solutions will also be relevant in addressing longer-term development challenges. The speakers at the policy panel suggested that the strategy for post-COVID-19 economic recovery should harness promising fourth industrial revolution (4IR) technologies such as e-learning, e-commerce, and tele-health. Institutions have a key role in facilitating the 4IR approach: good governance and institutional reforms are needed to overcome problems in co-ordination and to avoid market failures.

To ensure sustainable pandemic recovery and long-term economic transformation in Africa, investments will also be needed to modernize agriculture, infrastructure, and health sectors, not forgetting inclusive support for human capital and environmental protection. Attaining the objectives will require great leadership. 

The key messages raised during the conference will be valuable in guiding UNU-WIDER's research on the effects of COVID-19 and will feed into our upcoming events — for instance, the WIDER Development Conference being held September 2021. Every step — all the way from empirical research to sound policy choices and collective action — is needed to overcome this historical global challenge.

The views expressed in this piece are those of the author(s), and do not necessarily reflect the views of the Institute or the United Nations University, nor the programme/project donors.

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