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The fifty-third session of the Conference of African Ministers of Finance (COM) opened in Addis Ababa with strong statements from high-level leaders, including the Prime Ministers of Ethiopia and Barbados, Abiy Ahmed and Mia Motley respectively, welcoming Friday’s decision by the world’s seven largest advanced economies to support the expansion of IMF Special Drawing Rights to help developing countries cope with the coronavirus pandemic.
Commending ECA for its role in promoting SDRs, Prime Minister Ahmed said: “Finance and Development Ministers from across the continent, along with ECA, have been at the forefront of discussions on the response to the crisis. COVID19 and have come up with solutions that have benefited not only the continent but the world, such as the Debt Service Suspension Initiative and now the quest for Special Drawing Rights. The Debt Service Suspension Initiative (DSSI) provided more than $ 5 billion to Africa in 2020.
SDRs play an influential role in global finance and help governments consolidate their reserves and provide foreign exchange for trade. They are also used as the basis for lending from the IMF’s crucial crisis lending facilities, with the institution using the instruments to calculate its loans to countries in need.
The Ethiopian Prime Minister called on leaders and institutions around the world to support measures to mitigate the impact of COVID-19 on African citizens and economies.
“Africa has demonstrated that it is not only capable of facing this crisis, but that it is also ready to formulate and implement solutions,” he said, adding that African countries must focus on the digital transformation, the climate smart economy and the institutional framework for implementation and accountability as they react and reset towards a resilient green recovery after the pandemic.
“On the digital economy, we need to increase our investments – a trend being turbocharged by the COVID-19 pandemic. The digital economy is both a source of growth and a key enabler of competition for other productive sectors. “
The Prime Minister urged the continent to “build resilient institutions capable of implementing reforms to help the continent meet the challenges of the future”.
“It requires reforms, consensus, monitoring and course correction. It is the best anchor we can build as we collectively prepare for the next crisis. We need continental institutions, regional institutions and national institutions to be united, ”he said.
Prime Minister Motley, who is also chairman of the Joint World Bank-IMF Development Committee, also praised the IMF for moving quickly to support countries, but said countries, especially vulnerable middle-income countries, needed more liquidity and demanded that “rich countries pledge half of their additional and unused SDRs to developing countries” to help them respond adequately to the health and economic crisis that has unleashed by the pandemic.
On the issue of vaccine availability in developing countries, Prime Minister Motley said: “We cannot abandon the world’s immunization to uncontrolled market forces. We need a comprehensive approach to immunization. These are not nice to have, they are imperatives. There is no going back. We must reform the line, redouble our efforts and move forward. “
“COVID-19 stopped us in our tracks. We need a more comprehensive response to the deepest crisis of the past hundred years. “
For her part, ECA Executive Secretary Vera Songwe said: “There is now real momentum for collective action on SDRs at the spring IMF and World Bank meetings following the recent meeting of G7 finance ministers and we welcome that.
She added: “There has been a decoupling of the global response between advanced and developing countries. Advanced economies have reacted quickly to consolidate their economies by providing trillions of dollars in liquidity. On vaccines, decoupling of access and finally on fiscal policy. To better move forward and fill these gaps, SDRs are the key to solutions for emerging and border economies. “
Ms. Songwe said Africa was not yet out of the response phase. It needs liquidity to move from responding to resumption and extending the DSSI until the end of the year, she said, adding that the issuance of new SDRs was urgent.
“As the developed world shifts from response to recovery, Africa must not be left behind,” she said, adding that the continent’s recovery must be focused on job creation and green jobs.
Rising poverty can lead to “lower for longer” poverty traps, undermining past gains. This, Ms. Songwe said, meant that additional liquidity had to be channeled to the private sector and small and medium-sized enterprises, the engine of the African economy. Countries need to put in place enabling reforms, she added.
Ghana’s Finance Minister Ken Ofori-Atta, speaking from Accra said: “Our approach to defeating this pandemic will make the difference between a lost decade and a rapid recovery that puts us on a sustainable growth path.” He said placing climate-conscious industrialization and digitization at the base of Africa’s recovery and structural transformation was key to a green recovery.
“The industrialization of Africa is a good strategy not only for Africa but also for the world”, declared the Ghanaian minister.
He added that now more than ever, Africa must prioritize building resilience, finding new financing models to support a sustainable recovery, boosting domestic manufacturing capacities to create jobs and mitigate the risks of the crisis. global supply chain, leveraging African integration and regional value chains and scaling up digital transformation and inclusive innovation.
The outgoing President of the COM Bureau and Moroccan Minister of the Economy, Finance and Administrative Reform, Mohamed Benchaâboune, for his part declared: “Indeed, new digital technologies not only increase the resilience of African countries facing increasingly unpredictable exogenous shocks, but they can also initiate a sustainable industrialization process that would help diversify African economies, increase their added value, and reduce their dependence on the outside world , increase their productivity and improve their job creation capacity.
Minouche Shafik, director of the London School of Economics and former deputy governor of the Bank of England, said African countries have the opportunity to ‘jump’ to affordable universal health care that can help during such crises thanks to digital and technological innovations.
She said the current situation offered an opportunity “in which we can define a new social contract in Africa”.
The opportunity, said Ms. Shafik, comes as many African countries are moving from a social contract that relies heavily on the family to one in which the state helps with certain responsibilities, such as taking in charge of the sick and the unemployed. The goal, added the LSE director, was to achieve a better balance between security and opportunity on the continent, building on the current COVID-19 crisis.
The high-level panels focused on whether the multilateral system was prepared for the COVID-19 crisis and whether the private sector was doing enough; debt and liquidity management and the role of the private sector; and whether Africa is ready to finance its own vaccine.
This year’s hybrid meeting is held under the theme “Sustainable industrialization and diversification of Africa in the digital age in the context of Covid-19.
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