African finance ministers call for debt relief as a result of the Covid-19 induced economic collapse

AFRICAN finance ministers have called for debt relief from the international community as a result of the economic meltdown they are facing as a result of the shutdown enforced upon them by the coronavirus pandemic.

Following the outbreak of the pandemic last December in China, global production has nearly collapsed as most economies have been shut down, with production severely reduced. African economies have borne the brunt of the shutdown because they lack the foreign reserves, stockpiles of goods, food surpluses and spare production capacity.

Earlier this week, African finance ministers held a virtual meeting where they decided to call for debt relief from bilateral, multilateral and commercial partners. The meeting was hosted by the executive secretary of the Economic Commission for Africa, Vera Songwe and co-chaired by ministers Tito Mboweni of South Africa and Ken Ofori-Atta of Ghana.

They said: “Development partners should consider debt relief and forbearance of interest payments over a two to three-year period for all African countries, low-income countries and middle-income countries alike. Substantial drops in revenue from commodity price drops coupled with increasing costs of imports are putting pressure on both inflation and the exchange rate.

“In addition, since Africa is a net importer of pharmaceutical products, enabling local continental production could serve to protect some jobs and guarantee the supply of essential medicines during the crisis. Over 54 countries have banned exports of pharmaceutical products, so the ministers called for an end to these procedures."

At the meeting, the ministers acknowledged the importance of the private sector in job creation and the recovery efforts, even as they called on development finance institutions to support the private sector in this difficult time. They also called for joint protocols on border closures to allow for trade and humanitarian corridors, adding that there is a need for liquidity facilities, refinancing and guarantee facilities to support the private sector.

In addition, the ministers discussed the enormous losses being incurred in the airline and hospitality industries. They subsequently called for the protection and preservation of the African airline and the logistics tourism industry, including by advocating for a stay on interest, lease, and debt payments.