President Nana Addo Dankwa Akufo-Addo has urged the global community to increase its efforts to help developing countries withstand the devastations caused by the deadly coronavirus pandemic.
In a keynote speech delivered at the 15th Edition of the European Development Days (EDD) in Brussels, Belgium, yesterday, President Akufo-Addo emphasised the need for the global community to increase efforts to help developing countries safeguard their economies against the dire effects of COVID-19.
The President also noted that developing economies have had their plights further exacerbated by the raging Russian-Ukrainian conflict, a developmenthe said was having a toll on Ghana and Africa in particular, but also much on the developing countries.
He further revealed the deadly effects of the ongoing Russian-Ukrainian war on African economies and what lied in stock for developing countries, citing a recent United Nations report, which estimated that 70 per cent of Africa’s economies were at severe risk from the Russian war in Ukraine.
“The World Bank also tells us that, subsequent to the conflict, the number of poor people in sub-Saharan African countries would rise from 413 million to 463 million this year, an increase of 50 million persons,” he stressed.
President Akufo-Addo continued, “In the midst of this,18 African economies have experienced credit downgrades, even when all economies are suffering adverse fallouts from last year’s pandemic, and we, in Africa, are also facing the risk of so-called “taper-tantrums,” as investors exit our markets, thereby exacerbating the increasing cost of borrowing” he further added.
He noted further that at the moment, support for non-IMF programme for countries to alleviate the debt burden was limited, as the initial facility designed by the G20 countries to offer respite to economies with elevated debt challenges – the Debt Service Suspension Initiative (DSSI) – has expired since December 2021, and has not been renewed.
In these trying times, President Akufo-Addo observed that an amount of $650 billion Special Drawing Rights (SDR), approved for the IMF in August 2021, which was meant to provide significant relief, has seen Africa receive a total of only US$33 billion (about five per cent).
Moreover, the promise to reallocate some US$100 billion of the SDR allocations to African economies, agreed to at the Paris Summit in May 2019, has so far yielded about US$36 billion in pledges as of April 2022, he indicated.
“Then, there is the matter of the “African Risk Premium,” when African entities are borrowing from the market, which increases the cost of capital, and which must be addressed, especially as Africa provides the highest return on investments obtainable anywhere, and has a good record of debt repayment,” the President said.
The combined effects of the debt situation, rising interest rates and rising cost of living were resulting in severe macroeconomic and financial instability, the President stated, adding that “what is clear, he pointed out, is that the ensuing damage cannot be cured so easily with the limited fiscal tools at our disposal and national policy adjustments,” he added.
President Akufo-Addo also touched on the relationship that existed between Africa and Europe, which he said should be the catalyst to further ensure that Africa gets the needed assistance, especially in these trying times.
According to him, the long-standing relationship between Africa and Europe, founded on ties of blood, culture, geography and history, should serve as a platform for enhanced co-operation between the two continents.
“Indeed, no one needs to tell us that the issues of peace, progress and prosperity in Africa and Europe are deeply intertwined, which presupposes that ensuring the development of Africa should be in our common interest. Now more than ever, strong partnership between Europe and Africa, reinforced political dialogue, and expanded co-operation in the fields of economic growth and international security, are required,” he said.
President Akufo-Addo continued, “We have to work together to achieve our goals, including a fair, equitable process of energy transition, which recognises that the entire African continent is responsible for less than four per cent of global emissions, and which safeguards the prospects of Africa’s development.”
It was for these reasons, according to the President, that the establishment of the €300 billion Global Gateway package by the European Union, which aimed to boost public and private investment in the areas of infrastructure, energy and green transition, digital transformation, growth and jobs, transport and human development over the next seven years, was very much welcomed.
President Akufo-Addo emphasised that the package must be innovative in its approach to infrastructural investments and financing, and should be characterised by demand driven projects, which deliver on African defined priorities.