The African Development Bank (AFDB) has recently launched the 2021 Africa economic report and among the key things highlighted are the growth projections despite the covid -19 pandemic. The road ahead for Africa especially on the impact of covid-19 and government debt offering mitigating measures to governments and policymakers.
The covid-19 pandemic has negatively impacted Africa’s economy whereby we have seen countries struggle to support the needs of their citizens. In Kenya, we have seen a great number of people lose their sources of income especially those who are in the informal sector. Despite the challenges caused by the global pandemic on the economy, Africa is expected to recover from its worst economic recession in half a century as reported by the African Development Bank on the 2021 African Economic Outlook report. It is expected to reach approximately 3.1 per cent growth in 2021.
The African Economic Outlook report 2021 also highlights numbers on Africa’s economic performance and outlooks. Speaking during the Launch, The African Development Bank Vice President and Chief Economist Rabah Arezki cautioned that Africa’s predicted growth could be subject to major downside risks arising from both external and domestic factors stating that the cost of inaction will be large.
The year 2020 saw the overall government spending across Africa skyrocketed as countries strived to support their populations through the tough times during the pandemic. However, this has resulted in a negative impact on budgetary balances and debt burdens for example of a country is Kenya that has continued to fall into debt during the Covid-19 pandemic.
The continent-wide projected recovery does not omit the threat of increasing poverty as an estimated 39 million Africans could possibly slip into poverty this year, following about 30 million Africans who were pushed into extreme poverty in 2020 as a result of the pandemic.
The report also finds that populations with lower levels of education, few assets, and working in informal jobs are the most affected and must be protected.
The African Development Bank has been at the forefront of supporting economic growth with numerous projects including the launch a $3billion social bond on global capital markets which will allow investors to help fund projects with positive outcomes for society and provide investment returns. These projects include improving food security, health care, and financing.
Vice President Arezki also added, ” Africa’s debt and development finance challenges should be discussed in partnership with the international community and that much larger financial support is needed whereby private-sector creditors need to be part of the solution.”
“We have a once-in-a-century opportunity at building forward better, more equitable, more sustainable, and above all more resilient. Prompt and bold measures are needed to make it happen, the report highlights the required actions.”