Africa should mobilise external financing for sustainable growth

Wednesday, May 19, 2021

To boost the prospects for a strong and sustainable recovery from the impact of COVID-19, African governments need to mobilise significant additional external financing, with the assistance of the international community, says President Cyril Ramaphosa.

The President made the remarks during his address at the Paris Summit on the financing of African economies on Tuesday, convened by French President Emmanuel Macron.

President Ramaphosa last night successfully concluded the visit where he was joined by African Heads of State and government. At the summit, they were joined by leaders of financing institutions, such as the International Monetary Fund, World Bank, Economic Cooperation and Development (OECD) and representatives of G7 and G20 countries.

The summit took place at a time when world economies are counting the cost of the COVID-19 pandemic and considering measures that are urgently needed for a swift recovery.
“The economies of the African continent have been particularly hard hit,” said the President.
The International Monetary Fund estimates that sub-Saharan African economies will grow at 3.4% in 2021, compared to global growth of 6%.

Although this expected growth will be buoyed by the resumption of international trade, higher commodity prices and a resumption of capital inflows, the recovery, President Ramaphosa said, will be slow.

“Following two decades of economic reform, the ability of many countries on the continent to implement macroeconomic policies that support a sustainable recovery is now constrained.
President Ramaphosa called on credit rating agencies to play their role “without acting as a deterrent to countries that seek to take advantage of credible and transparent credit relief measures”.
“The most important task at hand is to protect and save lives. We therefore need to ensure that everyone has access to the vaccine in an equitable manner. The World Health Organisation’s Access to COVID-19 Tools Accelerator (ACT-A) is a key instrument for achieving this goal.”
As co-chair of ACT-A, President Ramaphosa urged countries to assist in closing the US $19 billion financing gap for 2021.

He expressed South Africa’s support in the IMF’s Special Drawing Rights mechanism, saying this should be allocated without delay to provide liquidity to the global financial system and to support vulnerable countries.
“South Africa and other G20 members have called on the IMF to make a comprehensive proposal for a new SDR general allocation of $650 billion to meet the long-term global need to supplement reserve assets.”
South Africa is of the view that the IMF must explore options for members to channel SDRs on a voluntary basis to the benefit of vulnerable low and middle income countries.

“This should be done parallel to the general allocation and as soon as possible.

“We furthermore support an ambitious replenishment process of the International Development Association – or IDA-20 – as well as increased levels of official development aid.

“We strongly believe that alternative development financing mechanisms should not be a substitute for official development aid,” said President Ramaphosa.
In this regard, he said South Africa welcomes the pipeline of 30 projects - amounting to approximately $2 billion - for the African continent being prepared under the vaccines programme of the World Bank.

At the summit, discussions centred on external funding and debt treatment, as well as African private sector reforms and expansion, and infrastructure development. 

The Presidency said these discussions reinforced the role played by President Ramaphosa during South Africa’s 2020 tenure as chair of the African Union to secure a strong and inclusive economic recovery in Africa. 

During his tenure, the President appointed Special Envoys of the African Union to mobilise international support for Africa’s efforts to address the economic challenges African countries will face as a result of the COVID-19 pandemic. –