By Akanimo Sampson
President of African Development Bank (AfDB), Akinwumi Adesina, is calling for a quick and comprehensive plan for debt restructuring in Africa.
Adesina is the recipient of the 2017 World Food Prize, and Professor Joseph E. Stiglitz, recipient of the 2001 Nobel Memorial Prize in Economic Sciences.
He is also calling for vaccine justice for Africa. Speaking at the launch of the Bank’s African Economic Outlook 2021 report on Friday, Adesina decried the lack of Covid-19 vaccines reaching Africa.
“We need global solidarity and vaccine justice for Africa”, Africa’s premier development bank chief said.
Adesina underlined the stark disparities between vaccine acquisitions by several rich countries that have acquired sufficient vaccines to inoculate their populations twice over, and African countries, that remain primarily dependent on the World Health Organisation’s COVAX initiative for the minuscule quantities of vaccines acquired so far.
Speaking on CNN’s First Move with Julia Chatterley on Friday, Adesina said: “So far, 14.6 million vaccines have been delivered in Africa, but many people still cannot get shots in their arms. That is only 1% of what we need. We are way off the mark in terms of getting to 60% of herd immunity, and sadly, I do not see that happening for another year or two at this rate— not unless things change.”
According to him, “we therefore need to improve Africa’s access to vaccines. COVAX is doing a great job but still, we need more. We need them in adequate quantity. We need them quickly and we need them at an affordable price.”
Acquiring vaccines has significant implications for African countries. As Adesina emphasized in a broader discussion with panelists at the launch of the African Economic Outlook 2021—including Professor Joseph E. Stiglitz, recipient of the 2001 Nobel Memorial Prize for Economic Sciences—for Africa, rapid vaccine acquisition is a matter of life and death. As elsewhere, Africa’s first priority is to prolong lives and preserve jobs.
From an economic perspective, Stiglitz agreed with Adesina that the slow pace of acquiring vaccines and arresting the pandemic will make stemming extreme poverty and negative economic growth difficult. They agreed that a comprehensive global plan was needed to help countries cope with mounting debt, which the pandemic had compounded.
Africa’s economy is expected to grow by 3.1% in 2021. However, 39 million Africans could be pushed into extreme poverty this year because of the pandemic unless the international community takes the kind of action that Stiglitz and Adesina are calling for now.
The AfDB chief says: “as long as Africans remain unvaccinated, the world will go right back to square one.” He said no amount of ‘vaccine passports’ being advocated for by some developed countries could change that fact. “Africa needs to develop its pharmaceutical industry and begin manufacturing. The African Development Bank is going to support African countries to do this,” Adesina said.
Supporting this position, Stiglitz said in his conversation with Adesina: “One of the things that some of us have been campaigning for is the suspension of the intellectual property rights related to Covid-19 because the supply constraint that you describe is at least, to some extent, artificial… If access to the intellectual property rights were more extensive, there is throughout the emerging markets and developing countries considerable capacity to produce a lot of more vaccines.”
He added that it was in the self-interest of advanced countries to make sure that everybody has access to the vaccine and other related medicines. “The longer the disease festers in any part of the world, it can mutate and one of the things we know is that those mutations are not going to respect borders. The COVID-19 virus doesn’t carry a passport.”
Other notable African voices that have called for speeding up vaccine delivery to Africa are those of South African President Cyril Ramaphosa, WHO Director General Tedros Adhanom Ghebreyesus, and Director of the Africa Centres for Disease Control and Prevention, Dr. John Nkengasong.
However, at the launch of the Bank’s 2021 edition of its annual African Economic Outlook, Adesina urged African governments to consider collectively establishing an African financial stabilization mechanism, which would give Africa the fiscal space it needs to deal with debt. Africa’s collective debt now stands at 70% of the continent’s gross domestic product (GDP).
“It is high time that we set up a homegrown financial stability mechanism where we work together to mutualise our funds and ensure we avoid the spillover effects that come from global pandemics or any external shocks”, he said.
“We must start by making sure that we carry out the macroeconomic policy reforms and the fiscal policy reforms that we need to get done,” he said, adding that Africa “is not looking for a free pass. We are just looking for an equitable way in which Africa’s fiscal space gets dealt with.”
The idea was backed by Stiglitz, who proposed an international debt framework.
“That’s a question I’ve been very concerned with for a long time,” said Stiglitz. “You need debt restructuring, and that needs to be really high on the international agenda. Every country has bankruptcy laws but there’s no bankruptcy law for international debt. When there’s too much debt, it’s as much the creditor’s problem as the debtor’s problem.”
Stiglitz added: “What needs to be done with debt is comprehensive and quick restructuring. We don’t want to fall into the trap of doing too little, too late.” Stiglitz’s proposal calls for an international debt framework that includes the private sector, given its growing role as a source of government debt.
According to the African Economic Outlook, the share of commercial creditors in Africa’s external debt stock has more than doubled in the last two decades, from 17 percent in 2000 to 40 percent by the end of 2019.
Some hope has come in the form of new special drawing rights, potentially $500 billion, that the International Monetary Fund could issue, in accordance with the G20’s recommendation at the end of February.
Adesina said these funds will “go a long way” to stabilizing foreign reserves and the exchange rate, allowing countries to handle debt and re-engage in massive pro-growth investments that will help them to quickly recover from the COVID-19 pandemic.
Adesina presented a proposed African Financial Stabilisation Mechanism, strongly supported by Stiglitz, as a critically needed solution that would allow African countries to agree on a set of convergent macroeconomic policies and principles and pool funds. Adesina said: This will allow us to “deal with the cause of the illness and not always the symptoms.”
The 2021 edition of the African Economic Outlook estimates that Africa’s GDP contracted 2.1 percent in 2020, the continent’s first recession in half a century. GDP is projected to grow by 3.4 percent in 2021. The report estimates that African governments will require additional gross financing of about $154 billion in 2020/21 to respond to the COVID-19 crisis.
