By Aldiouma Sow, member of the RASA Permanent Secretariat.
This is a monthly publication of the World Bank known as Africa Pulse. It was published in October 2020. It focuses on the impact of the covid-19 pandemic and proposes solutions to the problems that this pandemic has caused to African economies.
MAIN IDEAS DEVELOPED IN THE REPORT.
The covid-19 pandemic is not yet over and African countries must not let their guard down. The arrival of a second wave is fuelling new uncertainties about the persistence and spread of the virus.
The COVID-19 pandemic has severely disrupted economic activity in sub-Saharan Africa. More than 40 million people are at risk of falling into poverty and the efforts made in Human Capital over the past decades are being shattered.
As a result of the combination of containment measures and the associated spillover effects of the global recession, growth is expected to slow across the region.
A sustainable recovery will depend on how quickly African countries prioritise policy actions and investments to create more, better and inclusive jobs. Priorities should be focused on three areas: digital transformation, sectoral reallocation and spatial integration.
The rebound in economic activity will be modest in sub-Saharan Africa in 2021, and the economic outlook remains subject to significant uncertainty.
The desired recovery path must lead to jobs and economic transformation. This transformation must be driven primarily by digital connectivity that is affordable, reliable and universal across Africa, by the transfer of resources to non-traditional economic sectors, and by massive job creation. The latter will require a decisive transition from the export of raw materials to increased value addition and intra-African value chains.
Countries in the region have limited fiscal space which will lead to a stretching of the public deficit. It is crucial to address these problems before they threaten regional and global security. For example, sub-Saharan Africa is looking to the international community for significant funding to invest in human capital, energy and digital and physical infrastructure. This includes better access to official concessional finance, which is needed to help low-income countries in the region emerge from this crisis by protecting the economically most vulnerable without compromising recovery and growth.
LESSONS LEARNED AND CRITICAL READING OF THE REPORT
The report shows that the economies of sub-Saharan African countries, like their counterparts in the rest of the world, have not been spared the Covid pandemic19 . The trade restrictions and economic crisis induced by these measures have led to a contraction of the economies of Western and Asian countries, which are the continent’s main customers. This has led to a decline in the volume of African exports, foreign direct investment to Africa and international aid to the continent. These factors have combined to slow down economic growth in many African countries. This is likely to lead to multifaceted and multi-sectoral political crises on the continent.
In terms of remedies, the institution proposes to focus on digital technology, job creation, which it believes should be achieved through sound policy choices (to enhance the attractiveness of African economies), external borrowing and foreign direct investment. Here we find the classic solutions that the World Bank has always proposed when crises of this nature and magnitude have ended.
As usual, this report also reveals a stubborn refusal to read economic dynamics in Africa through the same neo-liberal prism and through indicators that have shown their limitations in this area. These are mainly GDP and growth rates. As we know, this prevents us from seeing the real economic dynamics of the continent and the actors who are behind them.
For example, the report does not take into account the dynamism and role of the so-called informal sector. It has been established that this sector, which employs the largest number of the population, has played the role of shock absorber, but has also been the one most affected by the restrictive measures taken by African governments to curb the spread of the virus.
Contrary to what this report would have us believe, the rebound of the economy in the third quarter of 2020 is not only due to the financial and fiscal support provided by the government in the tourism, transport and agriculture sectors mainly. We know that this rebound was possible thanks in part to the lifting of restrictions that allowed informal actors to resume their activities.
Once again, we note the preponderance of traditional processes whose effectiveness remains doubtful as to their ability to pull the continent out of its rut. These are FDI, debt and international aid. The proposed support mechanisms are no different from the forms of support used before the pandemic. They are mainly borrowing, debt cancellation and even debt suspension. These mechanisms stand in stark contrast to the diagnosis of the continent in this report. This diagnosis presents the continent as the next largest market in the world with a very young and sufficient labour force.
Finally, it has long been established that the transformation of the continent necessarily requires a dynamic primary sector and a secondary sector that is able to process the products of the primary sector locally, all supported by national resource mobilisation strategies that rely on sovereign monetary and fiscal policies. In this respect, we note that the report makes no proposal to strengthen the productive capacities of the primary sector and the processing of its products on African soil, although we all know that this is the main lever for creating massive employment and for combating the unemployment that affects many young Africans, pushing them at times and in places into illegal immigration.