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Up to 19 occasions the International Economic Forum on Africa and they were all in Europe. The last, in fact, in Madrid. This year, the twentieth was going to take place for the first time on the African continent, but the covid-19 disrupted the plans. It was held this Monday, February 22, but virtually, from each home and computer of the more than 700 people who have followed an event organized by the Organization for Economic Cooperation and Development (OECD) and the African Union, and designed to promote the search for African solutions to African economic and investment problems. In this edition, which has examined the idea of investing in sustainable recovery to solve the economic crisis derived from the pandemic, the virus has been the protagonist, although not so much from a pessimistic approach, but rather as the trigger that has forced governments and states to react.
It is true that much has been lost during 2020 and no one among the twenty speakers at this forum has denied it: Africa’s Gross Domestic Product has contracted by 3% on average and 41 African economies have experienced a decrease in theirs for the first time in decades, as Ángel Gurría, Secretary General of the OECD, has recalled. Remittances have decreased by 41% and savings per capita, an average of 18%. The health systems, employment, education, production methods and quality of life of millions of Africans have been at risk. “But we must find opportunities in this unique context so that together we can march towards a better future putting our human capital at the center,” said Togolese Prime Minister Victoire Dogbe. Sharing tools and initiatives to fight the pandemic and relaunch the economy has been the general trend of this four-hour meeting. From countries such as Botswana, South Africa, Senegal, Madagascar and Ethiopia, among others, some have been proposed.
Madagascar: building hospitals and agricultural centers
According to the African Economic Commission, 94% of medical supplies in Africa are imported. We depend on the outside, despite the fact that with our biodiversity and our youth we could have the resources and knowledge necessary to satisfy medical needs ”, said the Malagasy president, Andry Rajoelina. That is why Madagascar has initiated several structural reforms of its health system in the last year. “We have built 20 hospitals and reorganized supplies, medical equipment …”, summarized the president.
He has also mentioned the creation of a 16,000 hectare agricultural center in the southwest of the country that was created with the intention of guaranteeing food self-sufficiency and exporting to other African countries. The president has been one of many leaders who has insisted on the potential for digital development in Africa. “The pandemic has allowed us to understand the importance of digitization, so we will establish it in all or public services in Madagascar,” he promised.
Togo: Broadband and Universal Health
Vaccination is a universal and non-negotiable imperative, which requires global solidarity, courage and coordination on the part of all countries, according to Victoire Dogbe, Togolese Prime Minister. In this context, the country has defined a five-year roadmap in which the priority will be social policies aimed at economic recovery. Among the measures underway, universal health coverage, a cash transfer program for the populations most affected by the crisis and investment in vocational training centers for young people in livestock, commerce, construction, renewable energy and agriculture will be deployed.
Another strategic axis is to promote digital transformation, which will help improve productivity, access new markets, create jobs and promote innovation. “The goal is to ensure broadband connection for everyone; we want to be one of the most connected countries in the region through fiber optics and that is why we have made it mandatory to guarantee the supply of fiber optics throughout the country ”, the minister assured.
Senegal: For a reduction in external debt
Senegal launched a $ 1.6 billion social and economic resilience program that made it possible to support the health sector by improving medical services and providing free treatment to patients with Covid-19. “We have been able to support the diaspora, we have been able to safeguard economic and social stability, we have been able to prop up the private sector, we have been able to preserve jobs through a series of budgetary measures and through liquidity,” said Macky Sall, Senegalese president.
Recovery efforts are mainly focusing on food sovereignty, livestock, agriculture, fisheries, pharmaceuticals, industry, and health issues. “At the same time, we have been working to promote the digital sector of tourism, energy infrastructure and construction,” he added.
Sall, who will assume the presidency of the African Union in 2022, has again called for a “considerable reduction” in external debt so that countries can have the necessary budgetary resources to continue and to weather the expenses caused by the response to the health crisis and economic and social resilience, but also to prepare for the post-coronavirus economic recovery. “And I must remember that, with an amount estimated at 360 million dollars, the African debt only represents 2% of the volume of global debt,” he warned. The economist Jean Hervé Lorenzi, from the Circle of Economists, has also spoken in this regard, as he has recommended that the debt moratorium that has existed for a few months not only be extended, but also that it be terminated only once the African economies have returned to the pre-pandemic growth level.
Likewise, he has drawn attention to the fight against illegal financial flows, which costs Africa more than 100 million dollars a year, has requested the revision of the mining code and the petroleum code so that they are compensated fairly for obtaining these resources and has criticized that, still, the perception of investment risk in Africa is so “exaggerated” and the rating criteria are often “incorrect”. “Our economies cannot be competitive under these conditions,” he declared.
Ethiopia: Carbon Neutral Industrialization
Africa must industrialize in a big way: in particular, before COVID-19 it was necessary to create some 25 million manufacturing jobs on the continent, and now there should be more, according to Arkebe Oqubay, special adviser to the Prime Minister of Ethiopia. “Only when we develop productive capacity can we achieve sustainable growth,” he assured. And also it cannot be done in any way, but it must be a carbon neutral industrialization. “We cannot repeat what the industrialized countries did in the 20th century; we have to embrace green industrialization ”, he requested, because the pandemic has already seen that countries that have developed more industrial capacity and have effective governments are recovering faster.
Rwanda: Support for SMEs
Rwanda’s reforms and investment in its small and medium-sized businesses have led the country to rank 53rd in the world for ease of doing business, according to the World Bank, and second on the continent. And they don’t want to lose this position. That is why these SMEs have been beneficiaries of a $ 200 million economic recovery fund aimed at providing bank loans, advice and business development that has supported 35,000 SMEs and created 189,000 jobs, according to Soraya Hakuziyaremye, Minister of Commerce and Industry.
But there is more progress made thanks to the country’s investment in the digitization of its economy: “This has allowed our SMEs to adapt quickly to the new electronic commerce. Some of the initiatives that I can mention are having fiber optic cables throughout the country, allowing fast internet access to all our citizens and companies ”. Also, the launch of the Kigali International Financial Center, the construction of a new airport and the launch of a national airline.
Botswana and taxes
Botswana is highly dependent on external income and therefore its challenge is to improve national income. To do this, a series of measures have been taken, and one of them is striking as unpopular: raising taxes and VAT on some products and services. But not in any way, Keith Jefferies, senior adviser at the Ministry of Finance and Economic Development, has defended. “We started with a tax on sugary drinks that is really to help tackle the problems of diabetes and other non-communicable diseases. And it will be combined with better public health education. “
Another tax on plastic bags has also been introduced to reduce consumption and environmental degradation, the taxation of gasoline and diesel fuel is being increased, partly to reduce consumption and pollution, also to raise funds for the maintenance of roads and finally, as part of a strategy to reduce carbon dioxide emissions. “We are also analyzing the feasibility of introducing a broader carbon tax that incentivizes the reduction of CO2 emissions to meet our obligations under the Paris Agreement on climate change.”
The importance of the African Free Trade Agreement
Several speakers have mentioned the African Free Trade Agreement (AfCFTA) as a hopeful tool for the continent’s economic recovery. The AfCFTA will establish a single commercial market for more than 1.3 billion people and it had to be a reality now, but its launch was interrupted by the pandemic. One of them has been Cristina Gallach, Spanish Secretary of State for Foreign Affairs and for Ibero-America and the Caribbean, who has described it as “the flagship program of the Agenda 2063 (the African Union roadmap to promote the sustainable development of the continent). “It will be the strategy that creates the jobs for the many millions of young Africans, so there is no doubt that it will make Africa stronger.”
The head of the development agency of the African Union, Ibrahim Mayaki, has also spoken about the creation of youth employment: “The creation of infrastructures makes it possible to tackle one of the biggest problems on the continent: the creation of 20 million jobs. of work each year for young people entering the labor market ”. The general feeling, after the interventions of all the participants, is that the continent is ready to move forward, it just needs to be left. Or, as the African Union’s special envoy, Tidjane Thiam, has put it: “We Africans don’t need ideas or determination. We just need to be provided with an environment in which we can give the best of our abilities ”.