The Economic Commission for Africa (ECA) on Wednesday urged African countries to adopt policy measures that encourage green investments. This will help increase productivity to facilitate a durable recovery from the coronavirus crisis and achieve sustainable industrialization.
Hopestone Kayiska Chavula, Officer-In-Charge of the Macroeconomic Analysis Section of the ECA said countries need to support SMEs and strengthen social protection systems to revitalize livelihoods. He made this remarks at the beginning of the 39th ECA Conference of African Finance Ministers. green green green
He stated that countries must build on and strengthen existing monitoring and evaluation and statistical systems to continually assess and refine mitigation and recovery measures.
“Strengthening health systems, including through the establishment of the regional state of the art health centres is also critical. There is a need for support from the international community to address liquidity constraints and promote recovery”.
Mr. Chavula explained that this can be done through new issuance and reallocation of SDRs, lower cost of credit, and orderly debt restructuring. He also called for recapitalization of Multilateral Development Banks (MDBs).
Impact of COVID-19 on Africa
Also, he underscored that COVID-19 had significantly affected social and economic development progress on the continent. The ECA estimates that between 49-161 million people will fall into deep poverty as a result of the crisis.
“Much of the progress achieved in recent years in education, health, and poverty eradication has been halted or reversed by the COVID-19 pandemic”.
The AfDB expects Africa’s GDP to recover in the 3rd and 4th quarters of 2020 with a positive 2021 outlook. Fiscal deficits have widened due to increased government expenditure to halt the spread of the pandemic. As a result, many more African countries are at risk of debt distress.
Mr. Chavula further noted that African countries have maintained accommodative monetary policies to reduce the negative effects of the pandemic. They have done this despite inflationary pressure in some countries. African trade declined but is expected to increase with the implementation of the African Continental Free Trade Area (AfCFTA).
“Access to concessional financing will be vital in restoring lives and livelihoods . And [also] regaining momentum towards achieving the sustainable development goals and Agenda 2063”.
Real GDP growth remained subdued on the continent mainly due to the risks associated with the second wave of infections. Other contributing factors are lower commodity prices, significant fiscal risks and conflicts in some countries.
However, Mr. Chavula noted that 2021 looks positive, due to the availability of COVID-19 vaccines. He added that improved economic activity in the 4th quarter of 2020, holiday and travel expenditure are positive signs.
On risks and uncertainties, he said the second wave of infections, expansionary fiscal measures, and rising debt levels posed downside risks to many African countries’ growth. Post-election instability and social unrests, which may in part have emerged from pandemic-related economic hardships and lockdown fatigue, have induced uncertainties in some countries.
Mr. Chavula also noted that climate change risks, particularly as several countries are at high risk of extreme weather events, could also undermine economic growth.
On the other hand, the pandemic has created an opportunity for climate resilient green growth as an opportunity to drive recovery. The theme of this year’s Conference of Ministers is Africa’s Sustainable Industrialization and Diversification in the Digital Era in the Context of COVID-19.