African Development Bank president Akinwumi Adesina speaks to the FT’s Vanessa Kortekaas about the impact of the coronavirus crisis on African economies, debt relief and how countries can recover from this pandemic.
So far the number of infections in deaths from kovac 19 across africa have been relatively low but the world health organization is also warned that a hundred and ninety thousand people could die in africa during the first year of this pandemic alone if containment measures fail what is your view on how african countries have responded to this crisis so far i think
That this is a global pandemic that affects every part of the world so any single decade any part of the world’s weren’t there too many and so because it’s all about our collective humanity and so you have in a situation where africa is starting later than others i think also you’re finding that africa is not done a lot more testing as others have done so the level
Of testing you see purely low and obviously because of the weaker public health care systems you know if this gets away from us obviously that’s going to be very difficult and of course the difficulty of african governments have in the pisco space to be able to respond very very actively to this could become a problem so yes we’re just hoping that this continues
To hold as low a disease or we are planning that in case it doesn’t that we have the resources to support the countries to do the testing to have the isolation centers and to be a quite responsive in dealing with vulnerable groups affected and what is the outlook for africa’s economy taking into account the possible long-term effects of the coronavirus crisis
Impact on the economies that kind of quite significant you know we expect a began developing bank that african economies will actually go into a recession this year anything between minus one point four percent to three point one percent is what we are projecting in terms of the deep in the gdp growth rates for the continent but if you look at how much advocates
Accurately on the news it’s a lot of money i mean you’re talking about anything between one and and fifty seven billion dollars of gdp laws to anything about two hundred and twelve billion dollars you know so that’s a lot of money you know this year and next year so that’s that’s really big impact and of course as you know this impacts i’ve actually affected many
Of the countries in terms of the revenue that they’re getting in particular you know what i sampled with the oil prices they all practice i said johnny collapse it has actually declined 50% since january so you see government revenue it’s been really affected and therefore ability to cope it’s been a picker so africa will need significant amount of resources so i
Love you to be able to cook with this particular global pandemic and the african ministers of finance have said africa will need anything about women and 15 15 billion dollars and our estimation shows that i’ve dealt with anything between one hundred and fifteen billion dollars to about one hundred and fifty billion dollars or one could be four billion dollars let
Me say we share well let’s talk about that financial assistance more i mean your organization has announced a ten billion dollar loan facility in response to this crisis where is that money going and who can access it by facility is to provide resources for immediate liquidity for the country’s supporter countries to be able to buy the equipment’s that they need
To be able to support the private sector in particular don’t forget the private sector is the key for the economy so we’re providing about 1.4 billion dollars of that to talk ten billion dollars to the private sectors support them in terms of guarantees in terms of lines of credit to support them in in fact in we profiling method both principle that and also in
Terms of the interest payments embedded for the private sector clients that we have and a lot of our support to the private sector is actually going to be for the smes as you know the greatest share of the sector and the private sector in africa is actually the smaller medium-sized countries we are paying a lot of attention you know vanessa to the fragile states
Nor countries you know the that are landlocked countries are actually more difficult for them to even get access to equipment you’ve met it seems all the things that they need we’re paying great attention to those countries we call them the in our in the bank we call them the african development fund countries these are the countries that don’t getting loans from
Us but they actually get grants for us and we have a total of 3.1 billion dollars set aside for those countries to be able to get access to resources today for the countries that are oil exporting countries the ones that are the bigger countries we have about five four five billion dollars set up for them to be able to access it and does that wider loan facility
Package does that include cash payments to certain sectors for example laborers to make lockdowns and restrictions more sustainable and are you confident it’s reaching those areas and the people who need it the most the informal sector are funded by me affected by small and medium-sized enterprises effective you take for example the whole issue of the lockdown
Back you know everybody was practicing well it’s okay but you know while the developing economies can lock down and have a lot of money to support small and medium-sized enterprises and to make compensating wage payments during the lockdown applicant just simply doesn’t have that and you have about 80 percent of the labor force that’s like these small and medium
Sized enterprises and the employment sector so there’s we no money for that so there’s no option but to actually gradually open up that economy but as they open up the economy one has to pay a lot of attention to but our ability in particular you know the more vulnerable countries the more variable part of the population the those that are in the informal sector
And the small and medium-sized enterprises we are as part of our support going to be working with original member countries to also have policy reforms you know policy reforms to diversify the economy policy reforms to also make sure that they are increasing the share of the government expenditure that’s going to be going to critical sectors social sectors secure
Protection those prequels things are very very important it’s not just a microscope you got to worry about red impala of every single person on the street and you’ve talked a bit about the approach in the developed world and europe in the u.s. we’ve seen fiscal rules sort of thrown at the window as governments try and support their economies through this crisis
Do you think that restrictions on countries like zimbabwe for example which can’t access funds from international financial institutions because of arrears owned including to your own organization should those restrictions be lifted during this pandemic and if not what are those countries supposed to do i said you know this is all about collective humanity right
Every single life matters and it doesn’t matter where than like this every single miles this is not a creation of any country zimbabwe and other countries that are under sanctions did not create the coronavirus there it’s not it’s not that it’s just a global health externality that they’re facing and so what we wanted to do we can leave them to die i have actually
Argued by the countries and our onerous actions we need a special way of dealing with that and we are going to our board actually this way you know to provide water consider support for zimbabwe it’s not a loan but they are going to be looking at a grand support that will allow them to be able to respond to this to be able to create that front walker’s the doctors
The technicians that they need to buy the personal protective equipment to buy the medicines to get the ambulances that they need and to be able to literally pay for isolation centers look if we if we actually at this time distance ourselves right and i’ve made that point that we can do social distancing what we shouldn’t do fiscal distancing of anybody or anyone
And in terms of debt relief for african countries the g20 has announced a freeze on bilateral government loan repayments until the end of this year for low-income countries does this go far enough and do you think going back to this point about you know country specifics do you think that a one-size-fits-all approach can actually work here one person purpose i
Think that it’s a very i commend the g20 for the initiative i commend also the african heads of state for engaging with the g20 heads of state and government it’s a very good faith at g20 has done to actually discuss about the debt moratorium for at least developed countries and in this case in a lot of low-income plans actually in africa and the fiscal space at
Essentially tied it around them now if they were to actually finance a lot of the you know fiscal deficit you know they will have to actually have no choice but just to go and borrow but they don’t have to worry in a market that’s very tightly typically start there many of them are getting downgraded so they don’t need to have the fiscal space so i think the g20
Initiative to hard debts are you filing it’s a very very good initiative and i think that could allow i mean african heads of state of code for debt cancellation that’s being pushed in the discussions in that what to have happy to happen i mean that will easily free of anything about 130 to one and fifty billion dollars for africa and crystal space that he needs
And you mentioned euro bonds there so should african countries with debt obligations and euro bonds should they be receiving help here – yes i mean it’s like if you if you’re really going to be with this particular law it has to be a comprehensive approach and i think they approach been taking is comprehensive so you know there’s going to be a lot of conversations
Going on with the g20 between us as more collapse or development bank but also with the commercial i mean those are on the euro bond markets and of course with the rating agencies you know we’re making poignancy smarter they have to be part of this conversation as well what do you think is the right balance between african countries receiving assistance from the
Imf from the international community versus homegrown initiatives from african governments of from organizations like yourselves well you know i mean for us we we you know i believe that you know charitably you know begins at home and we have come out very base for nearly 10 billion dollar support and beyond that all savanna stuff we would need something i was
Quite exciting for us at the bank airport for come tonight we launched a social a fact borne out by rizzuto blunt on the international capital market for three billion dollars battery billion dollars it was as subscribe by the way it is the lightest at the social impact bond that is us dollar denominated in world is free ever in the history of the world and that’s
Listed on the london stock exchange and which has been over subscribe to about four point six billion dollars so this is that we are providing you know we are also doing directly profiling for the private sector entities that are our clients and those are local solutions that we are also providing and of course you know as we also deal with this issue one has to
Look at the importance of local currency finances because you know when you have countries but i haven’t find i mean their concept i’m getting depreciated as you have depreciation you also have they the captive lights that are actually happening in many of these countries africa all of the emerging markets have lost at least seventeen billion dollars of capital
Flight since since january even the local operate bonds that have been each to him because of the of these many of those resources have been living and so africa has no choice but have developed local solutions however as i said in the beginning we need to make sure that there is fiscal space well you need some space to breathe and so that’s why i think a collective
Approach to make sure that it can be a fist to space expansion for african countries while at the same time working on the local solutions as we have been doing here are those things can connect together that’s the right way to go and looking ahead to the long term do you think if africa fares better from this virus and in health terms which would obviously be
A very good thing do you think that the economic impact could actually be far worse in the long term don’t forget about africa you know has six or seven of it ten fastest-growing economies in the world until this happened you know and and so you see either we have to continue the same trajectory in the long term as we shift from the medicinal hopefully with the
Containment of the virus and also the development of vaccines that you will find that will have to continue you’ve written about the threat of locust 19 do you think first of all can you explain to our viewers what that is and do you think that that combined with a threat of kovan 19 could create a sort of perfect storm threatening africa’s economy right now you
Know why we are all trying to deal with the corporate 19 situation there’s another looming larger crisis that we are going to be facing now and that is phone there’s at low cost now this locust have invaded east african countries i’m you can think but you have roughly 150 million locusts that insects but i you know it we’re making consumed food 435 of second feet
35,000 people literally in that single day the bass tells you that you know yields added to be drastically affected food production is going to go down significantly we’re looking at a possible plea that in fact the number of hungry people in eastern africa region may rock i stood 30 million people well you know so you have a challenger in task if you make it right
Through kobe’s nineteen they said high possibility you could actually die for punk and so we must at the same time work on corbett 19 health prepared you know interventions to me to get this crisis but we must also focus on this rapidly developing canes of locust impatience in east africa that they say it is basically of biblical proportions it’s just amazing the
Numbers if we’re not careful no cost i mean a cop in nineteen will also lead to what i called low cost 19 and that would be a disaster and finally what impact do you think the coronavirus crisis will have on other priorities for the african development bank for example investing in renewable energy in africa we will continue to do the same things that we’ve been
Doing electricity making sure we can feed africa we can help africa to industrialize we can create jobs for the continent and we can integrate the continent these are the things that we are doing on the highway this corner virus is just a detour of the highway and by go straight we’ll fill it up so we come right back to the same agenda and will continue because
That africa needs to move faster and african economies will come out of this corner paris provided we have all the support around the world to give it a fiscal space it needs more resilient to continue to do what it must do which is to actually grow fast and and input the quality of life once people doctor to say no thank you very much for your time
Transcribed from video
Covid-19 and 'Locust-19' threaten perfect storm for Africa | FT Interview By Financial Times
