Africa should mobilise external financing for sustainable growth
Paris Summit on the financing of African economiesPresident Cyril Ramaphosa of South Africa arrives at the Élysée Palace and is received by President Emmanuel Macron of France (Photo: Siyabulela Duda/GCIS)
19 May 2021
To boost the prospects for a strong and sustainable recovery from the impact of COVID-19, African governments need to mobilise significant additional external financing, with the assistance of the international community, says President Cyril Ramaphosa.
The President made the remarks during his address at the Paris Summit on the financing of African economies on Tuesday, convened by French President Emmanuel Macron.
President Ramaphosa last night successfully concluded the visit where he was joined by African Heads of State and government. At the summit, they were joined by leaders of financing institutions, such as the International Monetary Fund, World Bank, Economic Cooperation and Development (OECD) and representatives of G7 and G20 countries.
The summit took place at a time when world economies are counting the cost of the COVID-19 pandemic and considering measures that are urgently needed for a swift recovery.
“The economies of the African continent have been particularly hard hit,” said the President.
The International Monetary Fund estimates that sub-Saharan African economies will grow at 3.4% in 2021, compared to global growth of 6%.
Although this expected growth will be buoyed by the resumption of international trade, higher commodity prices and a resumption of capital inflows, the recovery, President Ramaphosa said, will be slow.
“Following two decades of economic reform, the ability of many countries on the continent to implement macroeconomic policies that support a sustainable recovery is now constrained.
President Ramaphosa called on credit rating agencies to play their role “without acting as a deterrent to countries that seek to take advantage of credible and transparent credit relief measures”.
Protect and save lives
“The most important task at hand is to protect and save lives. We therefore need to ensure that everyone has access to the vaccine in an equitable manner. The World Health Organisation’s Access to COVID-19 Tools Accelerator (ACT-A) is a key instrument for achieving this goal.”
As co-chair of ACT-A, President Ramaphosa urged countries to assist in closing the US $19 billion financing gap for 2021.
He expressed South Africa’s support in the IMF’s Special Drawing Rights mechanism, saying this should be allocated without delay to provide liquidity to the global financial system and to support vulnerable countries.
“South Africa and other G20 members have called on the IMF to make a comprehensive proposal for a new SDR general allocation of $650 billion to meet the long-term global need to supplement reserve assets.”
South Africa is of the view that the IMF must explore options for members to channel SDRs on a voluntary basis to the benefit of vulnerable low and middle income countries.
“This should be done parallel to the general allocation and as soon as possible.
“We furthermore support an ambitious replenishment process of the International Development Association – or IDA-20 – as well as increased levels of official development aid.
“We strongly believe that alternative development financing mechanisms should not be a substitute for official development aid,” said President Ramaphosa.
In this regard, he said South Africa welcomes the pipeline of 30 projects - amounting to approximately $2 billion - for the African continent being prepared under the vaccines programme of the World Bank.
External funding and debt treatment
At the summit, discussions centred on external funding and debt treatment, as well as African private sector reforms and expansion, and infrastructure development.
The Presidency said these discussions reinforced the role played by President Ramaphosa during South Africa’s 2020 tenure as chair of the African Union to secure a strong and inclusive economic recovery in Africa.
During his tenure, the President appointed Special Envoys of the African Union to mobilise international support for Africa’s efforts to address the economic challenges African countries will face as a result of the COVID-19 pandemic.
At the Summit leaders stated their ambition to act together and fight the great divergence occurring within and between countries the President said in a statement
“The summit recognised the role of extensive immunisation against COVID-19 as [a] global public good and committed to ensure and accelerate equitable access in Africa to safe and affordable vaccines, treatments and diagnostics through the ACT-Accelerator and its COVAX facility,” said the President in a statement on Tuesday.
The Summit, said the Presidency, called for a swift decision on and implementation of an unprecedented general allocation of the International Monetary Fund’s Special Drawing Rights (SDRs).
The SDRs are expected to amount to 650 billion US dollars, of which 33 billion US dollars will be used to increase reserve assets of African countries.
Develop an Alliance for Entrepreneurship in Africa
At the Summit, leaders expressed support for African national strategies on growth and jobs, and welcomed the ambition to develop an Alliance for Entrepreneurship in Africa, with a broad pan- African reach and strong business focus.
The Presidency said the alliance will help mobilise all partners ready to support, through financial and technical resources, the development of the private sector on the continent.
During the two-day visit, President Cyril Ramaphosa held bilateral talks with African Union Chairperson and Democratic Republic of Congo President Félix Tshisekedi; Angola President João Lourenço; Ivory Coast President Alassane Ouattara; Mozambique President Filipe Jacinto Nyusi; Senegal President Macky Sall; Rwanda President Paul Kagame, and Togo’s President Faure Gnassingbé to enhance South Africa’s diplomatic relations.
Ahead of the start of the Summit last night, President Ramaphosa and President Macron of the French Republic met for bilateral talks at the Élysée Palace.
President Macron to undertake State Visit to South Africa in May 2021
The leaders’ discussion paved the way for the State Visit that President Macron will undertake to South Africa at the end of May 2021.
The leaders also discussed vaccine production and distribution, with President Ramaphosa emphasising the importance of the temporary waiver of the World Trade Organisation regulations on intellectual property, to enable Africa to expand its capability to produce vaccines that will combat COVID-19 and future pandemics.
In anticipation of the State visit, President Macron expressed interest to establish a partnership with South African vaccine - producing institutions, to enhance manufacturing capacity.
South Africa and France's relations spans across areas of cooperation in energy, education, science and technology, as well as trade and investment among others. The relations extend to the European Union, making South Africa a key trading partner.
Minister of International Relations and Cooperation, Dr Naledi Pandor and Acting Minister in the Presidency, Khumbudzo Ntshavheni, accompanied President Ramaphosa.