By Modupe Gbadeyanka
About 30 million people in sub-Saharan Africa have been pushed into extreme poverty by the COVID-19 pandemic, wiping out more than five years of progress, a report released on Wednesday at the ongoing Bloomberg New Economy Forum in Singapore has revealed.
Whilst some ground will be made up as economies across the continent recover, this will still not be enough to meet the United Nations’ Sustainable Development Goal of eradicating poverty by 2030 – a target that was already a stretch before the pandemic hit.
The Bloomberg Economics Special Report titled Long COVID: Jobs, Prices and Growth in the Enduring Pandemic highlighted the challenges the COVID-19 pandemic poses for growth, inflation and development globally.
A piece titled Half a Billion in Poverty and Counting: How Covid Derailed Africa’s Development Goals models how a lost year of growth has affected poverty reduction goals in Africa.
The turn of the century saw Africa’s economy on an upward trajectory due to reduced conflict, allowing for better economic policies and increased macroeconomic stability.
The International Monetary Fund and World Bank’s Heavily Indebted Poor Country Initiative in the early 2000s led to a substantial reduction in debt levels, freeing up domestic resources and improving donor relations. Increased trade and buoyant commodity prices also played a role, with GDP per capita in resource-rich countries growing twice as fast.
This resulted in better living standards for the populations — people became healthier, access to basic services such as water and sanitation improved, school enrolment increased, and the share of people living below the World Bank’s extreme poverty line of $1.90 per day fell from 58% in 2000 to 42% by 2015.
Since 2016, growth has faltered. The slowdown started a year after the adoption of the Sustainable Development Goals — the universal call to eradicate poverty by 2030 through progress on 17 integrated goals that range from health, education, inequality and climate change. Sub-Saharan Africa continues to lag behind on most of the goals. Most notable is the lag in poverty reduction; before the pandemic in 2019, Africa had more than 60% of the world’s 700 million poor.
The COVID-19 pandemic threatens to throw the region further behind. In 2020, sub-Saharan Africa plunged into its first recession in more than 25 years, erasing at least five years of progress in fighting poverty.
Economists forecast that lost ground won’t be recovered until 2024, when we expect per capita output to return to pre-pandemic levels. Sluggish vaccine rollout means many countries will continue to deal with virus outbreaks that delay the safe reopening of their economies. Rising debt service costs will continue to squeeze out much-needed development spending even when the virus effects fade.
The persistent impact of the pandemic on incomes means the poverty rate would translate into almost 25 million more people living in poverty, compared with pre-COVID estimates.
To make notable progress on poverty eradication, Africa will require immense support from the international community given the region’s limited resources. To address this gap, funding from official creditors including the IMF, the largest providers of external debt, remain crucial for sub-Saharan Africa.
Over the past 20 years, China has become one of the largest creditors on the continent and has seen its share of debt owed rise from about 40% in 2010 to more than 63% at the end of 2019. The West’s share, meanwhile, has halved from around 30%.
Beijing is now looking to deepen its ties with the region through the Belt and Road Initiative, a plan to advance development priorities by investing in infrastructure projects around the world. More than half of the 60-plus recipient countries are in Africa, increasing incentives for China to play a bigger role in the sub-Saharan area’s fight against poverty.
Done right, increased engagement with China promises to build needed infrastructure and open new routes to trade, helping deliver on Africa’s poverty reduction goals. Done wrong, it threatens to add to the debt and stymie the development of native manufacturing industry, adding to the region’s many other challenges.
The Bloomberg New Economy Forum in Singapore is convening over 495 participants in-person and virtually including public and private sector leaders from around the world, including representatives from Africa to contribute to new thinking on pathways toward a global recovery as the world reels from the impact of the COVID-19 pandemic.
Joining from the Forum’s new, innovative group of Bloomberg New Economy Catalysts are Mayor Yvonne Aki-Sawyerr OBE (Mayor of Freetown, Sierra Leone), Shamim Nabuuma Kaliisa (Founder and Executive Director of Chil Artificial Intelligence Lab, Uganda), Alloysius Attah (Chief Executive Officer and Co-Founder, Farmerline, Ghana), Nthabiseng Mosia (Co-Founder, Easy Solar, Sierra Leone) and others.
AfDB, Sovereign Investors to Develop Climate Resilient Projects
By Adedapo Adesanya
The African Development Bank (AfDB), Africa50 and Africa Sovereign Investors Forum (ASIF) have signed a letter of intent to collaborate on developing green and climate resilient infrastructure projects across Africa.
The three entities will work together to galvanize financing and drive the development of skills and expertise within the infrastructure sector.
The signing took place on June 20, 2022, in Rabat, Morocco, during an event to launch the Africa Sovereign Investors Forum.
Under the high patronage of His Majesty King Mohammed VI of the Kingdom of Morocco, 10 African sovereign investors including Nigeria, agreed to set up the Forum.
The newly formed platform will accelerate coordination to mobilize patient capital for the continent’s development.
The signatories are Agaciro Development Fund of Rwanda, Fonds Souverain de Djibouti, Fonds Gabonais d’Investissements Stratégiques (FGIS), Fonds Souverain d’Investissements Stratégiques (FONSIS) of Senegal, Fundo Soberano de Angola (FSDEA), Ghana Infrastructure Investment Fund, (GIIF), Ithmar Capital (Morocco), Nigeria Sovereign Investment Authority (NSIA) and The Sovereign Fund of Egypt (TSFE).
Africa50 CEO, Mr Alain Ebobissé signed for his organization, African Development Bank Vice-President for Private Sector, Infrastructure and Industrialization, Mr Solomon Quaynor, signed on behalf of the Bank, and Ithmar Capital CEO, Mr Obaid Amrane, who will serve as the inaugural chair of ASIF, signed on the new initiative’s behalf.
Me Ebobissé said: “this is an important step to building strong collaboration between the right stakeholders to meet the substantial infrastructure financing needs of Africa. We must make key regional infrastructure projects attractive and bankable for both global and African private investors and today’s signing will go a long way to address the continent’s infrastructure deficit.
“It is therefore important that we leverage the strength of the African sovereign wealth funds on the continent, who manage significant domestic savings, to drive the growth of Africa’s economies through the development and successful implementation of strategic infrastructure”.
On his part, Mr Quaynor said: “The African Development Bank’s partnership with ASIF and Africa50 would enable stronger collaborations on project development and co-financing, mobilization of capital to fund resilient, green and sustainable infrastructure and identification of investment opportunities to promote Africa’s infrastructure and industrialization.
“This is a key part of the Bank’s strategy to harness the estimated $2 trillion of assets under management from African institutional investors including sovereign wealth funds, pension funds and insurance companies for the continent’s infrastructure and industrialization,” he said.
Mr Amrane said “ASIF main objective is to accelerate the development of investment opportunities and to mobilize patient capital. As sovereign investors, we see strong complementarities with African Development Bank and Africa50, especially since our visions are aligned with regard to project preparation and capital mobilization.
“We are pleased today to formalize ASIF, AfDB and Africa50’s mutual desire to collaborate together, for we have a common objective to foster investment in climate-resilient projects, among others, according to our respective mandate.”
The collaboration agreement will also seek to address the identification and preparation of projects, a critical success factor in attracting financing to any project.
The Era of Unipolar World Order Has Ended—Putin Tells US, Others
By Kestér Kenn Klomegâh
At the plenary session of the 25th year of the St. Petersburg International Economic Forum (SPIEF), Russia’s President, Vladimir Putin, lambasted the United States and its Western and European allies, wholeheartedly predicted the end of the unipolar system and bristled at the idea of creating a new global order that might ensure equality and drastically change living standards of impoverished millions around the world.
Putin believes that the United States sees itself as a “messenger of God on Earth”, who has interests but no responsibility. “The United States is ostensibly unaware that over the past decades, new powerful centres have emerged around the globe and their voice is heard ever louder. Each of them is developing its own political system and public institutions and implements its own model of economic growth and, of course, has the right to protect them and to ensure national sovereignty,” Putin stressed.
While emphasizing the problems currently faced by the world’s economy at large, unfair competition among states, trade and financial wars, sanctions, restrictions, and so on, he asserted that the era of the unipolar world order has ended. The United States for the sake of ambitions and in the name of preserving outdated geopolitical illusions really don’t understand that the world based on such dogmas is definitely unsustainable.
In his opinion, “we are witnessing objective processes and truly revolutionary tectonic changes,” in the world. “After claiming victory in the Cold War, the United States declared it was the messenger of God on Earth, who has no obligations, but only interests – and these interests are sacrosanct,” Putin said. A world order based on the dogmas of unipolarity is unstable. Western elites are largely “clinging to ghosts of the past,” thinking that Western dominance is “an unchangeable and everlasting thing. Nothing lasts forever.”
New world order is still emerging but it’s clear that its rules will be created by those “who aren’t moving along a path set out by others.” “Only strong and sovereign states can have a say in this emerging world order or they will have to become or remain colonies with no rights,” Putin noted.
He further described as “thoughtless” and “insane” unprecedented sanctions imposed on Russia by a number of Western countries. “The idea was clear: crush the Russian economy violently, in a swoop, and deal a blow to industries, finance and living standards of people by destroying business chains, forcibly pulling Western companies out of the Russian market and freezing domestic assets,” he said.
Putin highlighted six principles constituting the basis for the development of the national economy during the forum. These are openness, reliance on freedoms of entrepreneurship, balanced macroeconomic policy, social justice, advanced development of infrastructure and achievement of technological sovereignty.
State sovereignty cannot be partial or fragmentary in the 21st century, all of its elements have equal importance. They reinforce and complement each other. That is why it is important not only to defend the political sovereignty and national identity but also to strengthen everything that ensures the country’s economic independence, its self-sustainability and independence in the matters of finances, workforce and technology,” Putin explained.
The president said that Russia changed in recent years through a planned effort to create a sustainable macroeconomic structure, ensure food security, enable import substitution and establish its own payment system.
Nevertheless, the sanctions have brought about “numerous difficult tasks” that Russia has to solve, he continued. “On the other hand, this situation creates new opportunities for us. We are saying this quite often, but this is really so. All of this will be an incentive to build an economy whose technological, production, workforce and scientific independence and potential is full rather than partial,” Putin said.
In a clear and concise but tense language, he expressed optimism that Russia would become stronger than before, taking advantage of emerging opportunities and new initiatives to build a better economy. With Russia under wide sanctions after sending troops into Ukraine, Putin spoke at length acknowledging the economic difficulties Russia faces as it tries to promote itself to international businesses, and the evolutionary processes in the new global configuration.
Chinese President Xi Jinping and Egyptian President Abdel Fattah el-Sisi, by video link, took part in a plenary meeting together with Russian President Vladimir Putin and Kazakh President Kassym-Jomart Tokayev. The forum brought representatives from Latin America, Africa and mostly Asia. There were a number of international organizations as well as representatives from more than 90 countries, compared to 140 countries during the pre-corona pandemic years.
Under the chosen theme ‘New Opportunities in a New World’ that reflects the changing global situations, the conference from June 15 to June 18 marked the 25th year of the St. Petersburg International Economic Forum (SPIEF) since its establishment. Over the last 24 years, the forum has become a leading global platform for members of the business community to meet and discuss the key economic issues facing Russia, emerging markets, and the world as a whole. Since 2006, has been held under the auspices of the President of the Russian Federation.
43% of Africa’s Population Lack Access to Electricity—IEA
By Adedapo Adesanya
The International Energy Agency (IEA) has said that $25 billion in annual investments could bring full access to electricity to Africa by 2030.
This is as the number of Africans with access to electricity fell during the COVID-19 pandemic, the Paris-based agency said Monday.
The IEA said 600 million people, or 43 per cent of the continent’s population, lack access to electricity — mostly in sub-Saharan Africa.
The number of people living without electricity increased by four per cent, or 25 million people, between 2019 and 2021, after a decade of progress.
According to IEA chief, Mr Fatih Birol, speaking ahead of the release of the agency’s African Energy Outlook 2022.
He said before COVID, there had been “lots of good developments in countries such as Ghana, Kenya, Rwanda.
“But because of Covid and the economic difficulties, we see that this positive trend is reversing now,” Mr Birol said.
It was also revealed that Russia’s invasion of Ukraine has added to the economic strains on Africa from the COVID pandemic, as the conflict has sent the prices of energy, food and other commodities soaring.
“When I look at 2022, with the high energy prices and the economic burden on the African countries, I don’t see many reasons to be hopeful,” Mr Birol said.
But Africa could get universal access to electricity by the end of the decade with $25 billion in annual investment, according to the IEA.
Countries need to give international financial institutions, especially development banks, a “strong mandate” to make Africa and clean energy on the continent “an absolute priority”, Mr Birol said.
“It’s not the case now,” he added.
Africa is facing more severe effects from climate change than most other parts of the world, despite emitting less energy-related carbon dioxide (CO2) than any other region, the IEA said.
“We have to see a huge amount of investment coming in Africa in all parts of the energy system, but the most important one will be clean energy options,” Mr Birol added.
“We would need to double the energy investments to reach our energy and climate goals.”
Renewables — including solar, wind, hydropower and geothermal — could account for over 80 per cent of new power generation capacity in Africa by 2030, the IEA report said.
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