Africa, Covid-19 and the economy: the least infected are the most affected
Africa was so overlooked during the pandemic that the continent began to take charge, explains economist Carlos Lopes, high representative to the chair of the African Union Commission. For him, the Covid could be a real opportunity for the continent to reverse both perceptions and certain trade flows.
Africa really needs narratives that tell it as it is, and not with a selective or biased view that systematically hides progress and highlights negatives.
Mainstream views automatically discount any facts that contradict the comfort of what people think they know, as if positive facts by themselves were detrimental to the need to help Africa and Africans. Such patronising attitudes are deeply rooted in the thinking developed during colonial times. They need to be urgently updated.
Yet if we try to change African narratives for the better, one of the main obstacles is going to be convincing Africans themselves of their capacities, their considerable innovation and the immense potential of their own agency. The pandemic has exacerbated well-established perceptions that make such change possible though. Africans were so left aside that a robust conversation about how to become more independent took root. Was this shift sufficient?
It all started with masks and protective equipment. As the world struggled to procure supplies from China, a couple of lessons emerged beyond the obvious skewed supply chains that have been built over time.
First, the need to collectively procure, coordinate and establish special transport corridors to access goods and equipment was at the heart of a new African Union initiative. These efforts resulted in savings and better negotiation for speed and agility. It is not negligible that Ethiopian Airlines became one of the carriers of choice not only for Africa’s urgent cargo needs but also to many other countries around the world, including in Europe.
Second, and based on the lessons from the Ebola outbreak, when Africa’s health precarities were exposed to the bone, a new Centre for Disease Control for the entire continent led the epidemiological efforts and quickly put in place coordination mechanisms amongst the best of any region. It is also interesting to note the prominent role of some African personalities in the global response to the pandemic.
Third, a flurry of repurposing initiatives saw Africans moving from those left aside to producers of new required goods and, in the same cases, even exporters.
As the needs imposed by the pandemic moved towards ventilators, and now vaccines, the story was pretty much the same. Africans were at the forefront of asking for vaccine manufacturing and special patent waivers from the pharma industry rather than vaccine supply from the leftovers of richer parts of the globe.
It is true that the vaccination inequality is still not addressed, threatening the gains made in the fight against the coronavirus. Selfish behaviour by the more powerful has been heavily criticised. But the conversation has moved on significantly from where it was a couple of months ago.
Instead of focusing on Africa’s poor health capacity, it is now a question of how many vaccines each of the richest countries can donate to the continent, while denouncing the generosity of other competitors as just plain vaccine diplomacy.
The fact remains that Africa has limited fiscal space to generate the stimulus responses to the current crisis, as seen amongst the OECD countries. Developed countries have accounted for nearly 80 per cent of all fiscal efforts. Compared to 16 per cent of their national incomes, countries in the least developed category, of which the bulk are African, have only increased government expenditure by 2.6 per cent on average.
Most of such efforts were directed to increasing the social protection systems. Yet, countries like Namibia, Rwanda, Togo or Morocco managed to introduce sophisticated electronic grant payment schemes to expedite processing. Within limitations, African banks lowered their repo rate and pushed for more lending.
Despite these impressive policies, Africans found themselves caught in the paradox of being the least infected but the most affected. Least infected by the virus, from a sanitary dimension, but the most affected by the economic and social impact of the virus.
Predictions of two decades of lost social gains may be exaggerated but official development assistance during 2020 did not increase, contrary to the many proclamations made. In fact, it decreased by 36 per cent. The same goes for foreign direct investments, which dropped by 18 per cent. Commodity prices also fell significantly, not to mention the absence of trade. Access to capital markets shrunk brutally, capital flight attained record levels and the depreciation of most African currencies continued. Such a perfect storm is not even close to being compensated by the record disbursements made by the International Monetary Fund and other international financial institutions.
Africa is experiencing a second paradox. It is credited with having access to an all-time high level of concessional lending when in fact, compared to what others are accessing, it is at an all-time low. The recent Financing for Africa Summit organised by President Macron is a good illustration of the paradox. Developed countries not using the approved allocation of the IMF Special Drawing Rights is dragging on the proposal to give that allocation to Africa.
We can say the same about the exciting opportunities for a green transition. In theory Africa will be supported. The reality though is that the various “Green Deals” and net-zero ambitious targets can propel an asymmetric access to resources for conversion that can leave Africa behind and penalise it further by applying carbon taxes to its exports. The principle of common but differentiated responsibilities in dealing with climate change seems to have been forgotten.
The global drive towards greener energy has accelerated swiftly. Africa, with its rich mineral reserves, will undoubtedly be pivotal in the shift towards greener energy. This will require significant investment in the mining of these commodities as extraction activities have typically revolved around more traditional metals and oil. Africa can leapfrog into the clean energy transition and engage in economic diplomacy.
Currently, it is endowed with 30 per cent of the world’s minerals but accounts for just three per cent of its GDP, which makes manufacturing renewable energy an immense economic opportunity. Commodities earmarked for the green transition are likely to benefit from increased demand in the medium- to long term, while limited capacity on the supply-side may result in elevated prices in the short run.
There is still a window for the narratives about Africa to not be infected by pessimism and see this virus as an opportunity.
Carlos Lopes is a professor in the Mandela School of Public Governance at the University of Cape Town. He has occupied several leadership positions across the UN system, including policy director for secretary general Kofi Annan and executive secretary of the UN Economic Commission for Africa. He is a member of the African Union’s reform team and also serves as high representative, supporting member states in negotiations with the EU.