French Finance Minister Bruno Le Maire on Wednesday warned that peace, security and global stability are in danger if the world’s economic superpowers do not contribute to Africa’s economic recovery from the Covid-19 crisis.
African leaders met in Paris over the past two days in a summit convened by France to strike a multibillion-dollar “New Deal” to aid the continent’s economic and health revival.
The Summit on the Financing of African Economies brought together 21 heads of state from Africa and leaders of continental organizations along with European leaders and the heads of major international finance organizations. In a press conference Tuesday night, French President Emmanuel Macron said the summit had yielded “a New Deal for Africa and by Africa.”
The signatories called for an additional $650 billion of IMF Special Drawing Rights to be released to close the gap between developed and emerging economies. However, only $33 billion of this has been earmarked for African countries and European leaders have vowed to donate their own shares in order to bring the total for the continent close to $100 billion.
The IMF may also contribute some of its gold reserves and in a joint communique after the summit leaders suggested that “flexibility on debt and deficit ceilings” could be used to further alleviate the burden.
G-7 and G-20 urged to contribute
Le Maire indicated on Wednesday that the French government would be pushing for greater contributions from other major economies at the upcoming G-7 (Group of Seven) summit in the U.K. in mid-June, and would also be reaching out to the G-20.
“Developed countries have invested more than 25% of their GDP to fight against the consequences of the crisis and to engage a very strong economic recovery. In Africa, it is less than 2% of their GDP,” Le Maire told CNBC’s Steve Sedgwick, adding that this trajectory risked a great divergence in the recoveries of economies and health care systems.
“This would be a very important danger not only from an economic point of view, but a real danger for security, for peace, for stability, for illegal immigration, so I really urge everybody to be aware of the current situation of the African countries and to be aware of the necessity of putting more money (into) Africa.”
He suggested that rather than just deploying grants, governments should look to invest in small and medium-sized enterprises, supporting African entrepreneurs who are “at the core of the economic recovery.”
Despite maintaining comparatively low Covid-19 infection and death rates compared to the rest of the world, sub-Saharan Africa is projected by the IMF to have experienced a 3.3% decline in economic activity in 2020, the region’s first recession in 25 years. GDP growth projections for 2021 also lag significantly behind the rest of the world’s 6% estimate.
The drop in activity is expected to cost the region $115 billion in output losses this year and could push another 40 million people into poverty, effectively wiping out five years of progress against poverty.
In Tuesday’s press conference, Macron also set a goal to vaccinate 40% of the population of Africa by the end of 2021, calling the current situation both “unfair and inefficient.”
‘Vaccine apartheid’
The summit has urged the World Health Organization, World Trade Organization and the Medicines Patent Pool to remove intellectual property patents blocking the production of certain vaccines.
IMF chief Kristalina Georgieva cautioned on Tuesday of dire global economic consequences if the vaccine rollout fails in developing countries and the health crisis continues.
South African President Cyril Ramaphosa on Wednesday told France24 that he welcomed the group’s call for major economies in the northern hemisphere to share their vaccine supplies.
“They have a huge surplus and we have no access, and that to me is vaccine apartheid and it can also be characterized as vaccine imperialism,” Ramaphosa said.
“We will never be able to defeat the pandemic, Covid-19, if we try to defeat it in the northern hemisphere only and not in the south.”
A landmark proposal to waive intellectual property rights on Covid-19 vaccines was jointly submitted to the World Trade Organization by India and South Africa in October.
Several months on, however, it continues to be stonewalled by a small number of governments. These include the U.K., Switzerland, Japan, Norway, Canada, Australia, Brazil, the EU and — until recently — the United States.
