Between 2000 and 2011, Beijing’s policy banks gave US$53.4 billion in concessional loans and lines of credit to 43 African countries; this trend accelerated after 2012, as noted above, bringing Africa’s debt to China sharply up to US$143 billion by 2017, with loans provided by the China Development Bank (CDB) and the EXIM Bank of China reaching US$35.5 billion and US$55.7 billion respectively. This represents roughly 22.9% of China’s total external loans and a similar percentage, 22% or so, of Africa’s entire external debts.
Africa’s growing public debt had sparked a renewed global debate about debt sustainability on the continent well before the COVID-19 pandemic. Africa’s allegedly unsustainable indebtedness is largely owing to the emergence of China as a major financier of African infrastructure, resulting in a narrative that China is using debt to gain geopolitical leverage by trapping poor countries into unsustainable loans.
The COVID-19 crisis is likely to have a devastating effect on Africa. As of June 2020 the number of cases is surprisingly small, which may reflect inadequate testing or an early stage of a much worse epidemic. But what is clear is that the economic impact of the worldwide epidemic will bring the most severe recession that Africa has experienced for decades.
African sovereign debtors are caught on the horns of a dilemma. On the one hand, they are obliged to help their populations deal with the COVID virus. This requires them to mobilize as quickly as possible the maximum available resources to spend on health care and on supporting people facing hunger, homelessness and unemployment. However, they know that they cannot raise sufficient financing for these purposes merely by mobilizing domestic resources and accessing official sources of finance.
African countries are scrambling to pull together the necessary resources to face the COVID-19 health crisis, cushion its fallout on the poor, support their economies, and stay current on debt obligations. Some are redirecting public spending, with Angola and Nigeria lowering the oil-price assumptions in their budgets to more realistic levels, at $33pb and $28pb respectively. Others have approved stimulus packages to contain the impact of the crisis on their economies and the poor.
When the new coronavirus (COVID-19) broke out in Wuhan, China, in late 2019, nobody, not even the World Health Organization (WHO), knew how far-reaching and devastating it would be. COVID-19 has exposed the limitations of the power of humans and rendered powerful states powerless. As the world’s scientists are racing to find a vaccine, countries are struggling to adjust to the “new normal.”
Among the many dynamics defining the crises scenarios in West Africa and the Sahel, food insecurity adds weaknesses to an already fragile humanitarian environment. According to WFP estimates, 12.3 million people found themselves in crisis or emergency conditions during the 2019 peak, from June to August, outlining a deteriorating situation since 2018, when 11.2 million people required food assistance.
As the COVID-19 pandemic tightens its grip on the Horn of Africa, its impacts are being felt unevenly across geographies, time, and different groups of people. These impacts go beyond the immediate risk of infection, compounding existing vulnerabilities, crises and risks to create an economic crisis that will take longer to recover from than the illness itself.
The pandemic is acting as a threat-multiplier for countries that were already struggling with other threats, such as protracted conflicts, economic crises, and climate change. As the risk of a global food crisis looms, Africa and West Asia are the regions where this perfect storm is the most likely to happen
It is not easy to estimate the total economic cost of the effects of climate change and pest infestation that have devastated millions of hectares of cropland across different African countries. Unfortunately, with no improvement on climate change, conflict, and the economic crisis in sight, their total impact on human livelihoods is likely to remain high and continue to grow for years to come.