International charity organisation Oxfam is urging rich countries to help poorer nations prevent catastrophic poverty levels.
This follows the World Bank predicting that the on-going economic impact of the coronavirus could push Sub-Saharan Africa into its first recession in over 25 years.
According to separate reports released by the organisations, African countries need to act swiftly to cushion their economies against the economic and humanitarian shocks of the deadly virus.
The World Bank, in its bi-annual Africa’s Pulse report, said growth in sub-Saharan Africa has been ‘significantly impacted’ by the outbreak.
The World Bank states that growth in sub-Saharan Africa could fall sharply from 2.4% in 2019 to -2.1 to -5.1% in 2020, sending the county region into recession, the first in over 25 years.
Countries in the region would be unevenly affected by the pandemic, however. The GDP of three largest regional economies, South Africa, Angola and Nigeria are projected to ‘fall sharply’ as a result of weak growth and investment.
Although governments in the continent have acted quickly to attempt to curb the spread of Covid-19, the crisis has the potential to spark a food security crisis, with agricultural production potentially contracting by between -2.6% to -7% if there are trade blockages.
Economist and lead author of the report Cesar Calderon says the immediate measures are important. “But there is no doubt there will be need for some sort of debt relief from bilateral creditors to secure the resources urgently needed to fight Covid-19 and to help manage or maintain macroeconomic stability in the region,” he said.
Food imports would decline substantially, as much as 25% or as little as 13%, due to a combination of higher transaction costs and reduced domestic demand.
In its Economic Rescue Plan for All, Oxfam outlined measures that could be adopted to cushion poorer nations from the economic effects of the pandemic.
The charity said at least $2.5 trillion must be mobilised to tackle the pandemic and prevent global economic collapse. Unlike ordinary assistance, the plan suggests prioritising helping people directly, giving cash grants to those in need and the immediate suspension of the debt payments of poor countries.
This should be combined with a one-off economic stimulus by the IMF and an increase in aid and taxes, according to the organisation.
Oxfam further predicts that the economic crisis caused by coronavirus ‘could push over half a billion people into poverty’ unless urgent action is taken.
The African Union, which is chaired by South Africa’s President Cyril Ramaphosa, has been urged to raise its voice to defend the right of African governments to protect their citizens from the worst pandemic in 100 years.
China and the Paris Club of creditor nations could play a leadership role on the world stage by announcing the suspension of all debt payments by developing country governments for the next year, it said. Fin24