Addis Ababa, Ethiopia, December 9, 2020 - African governments have been cautioned to ensure recovery policies are inclusive and address the existing gender inequalities to mitigate the adverse impact of the COVID-19 pandemic on the most vulnerable in society. This was the main message from panellists who gathered virtually on the second day of the 2020 African Economic Conference.
Speaking during a session discussing COVID-19’s macroeconomic effects and impact of debt sustainability on human development, panellists called on governments to use the urgency of the pandemic to make policy changes that will not only help in the short term, but will also strengthen long-term recovery efforts.
There is growing concern that unless governments take drastic measures to boost recovery, the adverse impact of COVID-19 may reverse many years of progress in the fight against poverty.
Panellists noted that the pandemic has undermined progress in closing inequality gaps, hence the need for inclusive policies to ensure sustained progress.
Experts believe that to fund any recovery, countries have to enact policies to increase resource mobilization, including creating an enabling environment to attract private local and foreign investment to avoid relying heavily on unsustainable external resources.
Raising more domestic resources will enable countries to recover faster and mitigate the adverse impact of COVID-19.
In his remarks, Prof John Asafu-Adjei, Head of Research at ACET, urged governments to improve management of domestic resources and mobilisation of financial resources.
“We believe that more needs and can be done to better manage and mobilize resources. We have strongly recommended that countries could close tax loopholes and eliminate tax assumptions,” he said. He believes that boosting domestic resources should inform the recovery plan.
Currently, on average, the ratio of tax to Gross Domestic Product (GDP) in most African countries is between 12 and 15%. Yet they need more fiscal space to boost economic growth which is required for countries to mitigate the adverse impact of the COVID-19 pandemic.
According to Dr. Mabouba Diagne, Vice-President at Ecowas Bank for Investment and Development, Africa needs to promote and facilitate intra-Africa trade to unlock opportunities for the private sector. “Today West Africa produces more than 10% of the world’s cotton, less than 2% is beneficial,” he said, urging countries to boost local production capacity as they continue to attract less revenue from exporting raw materials. Dr. Diagne added, “In order to create a level where Africa would sit at the negotiating table and have the power to negotiate for his interest, is when we built this year optimally.”
African policymakers were also called on to ensure the recovery plans are not only inclusive, but also pay attention to the diversification of economies to improve resilience to shocks.
The 2020 edition of the African Economic Conference is being held virtually from 8 to 10 December 2020. The conference provides a platform for academics and young researchers to present solution-oriented research to policymakers.
Plenary Session 2: Sustainable financing for an inclusive, greener and resilient COVID-19 recovery (UNDP) by Bernadette Namata