Dakar, 11 May, 2022 (ECA) – ECA Deputy Executive Secretary, Hanan Morsy, says a combination of efforts at national, continental and global levels are needed to respond to the shocks endured by Africa in the wake of the COVID-19 pandemic as well as the war between Russia and Ukraine.
Speaking on the theme of this year’s Conference of African Ministers of Finance, Planning and Economic Development (CoM 2022), “Breaking New Ground”, in Dakar, Senegal, Morsy noted that the continent was hit with a trifecta of shocks in food, fuel and finance.
“Even before the pandemic, Africa had huge development financing needs. In terms of infrastructure, it is estimated that the continent needed $150 to $170 billion a year. For education, we have a financing gap of $39 billion a year. Africa also needs 3 to 5% of its GDP to finance climate action. These were complicated by the pandemic,” sheexplained.
Among other global financing dynamics, the issue of higher inflation in Europe and elsewhere increased external borrowing costs for African countries and raised the risks of capital reversal. When the war started in Ukraine, the slow and steady recovery being made by Africa was put to another test.
“We have also seen the price of fertilizers double and an increase in oil and food prices because Russia and Ukraine represent a large share in terms of commodities in wheat, maize, barley, oil and gas,” she added.
African households spend an average of 42% of expenditure on food. This means that shocks produced by the war hurt the most vulnerable, mostly in Africa.
In confronting these shocks in the short term, Ms Morsy referred to the conclusions drawn by a working group constituted by the Ministerial Committee before CoM 2022.
“[The working group advocates] to extend the debt service suspension initiative by another two years and to waive away the IMF surcharges for two to three years. In terms of emergency financing too, the IMF needs to raise the access limits for countries to secure funding,” she pointed out.
On the continental level, she implored African governments to support the ECA proposed Liquidity and Sustainability Facility, to advocate for partial guarantees to de-risk private sector financing and to use more liability management system to extend maturities, review tax exemptions for the private sector and to scale up national resource mobilization.
The annual Conference of African Ministers of Finance, Planning and Economic Development (CoM) is the ECA’s largest annual event and provides an opportunity for participants to debate key issues on Africa’s development, and to discuss the think tank’s performance in delivering on its mandate.
For more information, please visit the CoM2022 web page.
Issued by:
Communications Section
Economic Commission for Africa
PO Box 3001
Addis Ababa
Ethiopia
Tel: +251 11 551 5826
E-mail: eca-info@un.org