Africa faces
frequent shocks caused by climate, terrorism, health issues, food insecurity,
crime and other sources of risk. Most of these perils emanate from the failures
of the rich and powerful economies, but end up inflicting a disproportionate
share of the poor and vulnerable.
The covid-19
pandemic has dealt a severe injury to Africa’s development prospects and
worsened the conditions of its poor and vulnerable. Although there are calls
for voluntary international aid to support the continent during this difficult
time, this is far from the best solution.
The continent must
be accorded damages and liability compensation from China, the rich and
powerful country that failed to transparently and effectively manage this
global catastrophe. Africa’s economic gains since the last global crisis have
been eroded. It is time to make offending rich countries pay the poor ones a
global risk burden tax for delaying their rise out of poverty.
Today, Africa is
home to more than 70 percent of the world’s poorest people, with more than 400
million living below the poverty line. It is no surprise that it is
disproportionately vulnerable to this crisis. It should not suffer even more
because yet another powerful country failed to act responsibly.
China should
immediately announce a complete write-off of the more than $140 billion that
its government, banks and contractors extended to countries in Africa between
2000 and 2017. This would provide partial compensation to African countries for
the impact that the coronavirus is already having on their economies and
people.
The analysis of the
balance of compensation due to Africa can then follow from discussions with the
Africa Union and its member countries, alongside global and regional
organizations including the United Nations, the World Bank, the International
Monetary Fund, the African Development Bank and the European Union.
Our world is long
overdue for a change of approach in the way it manages global risks that leave
the poor worse off due to failures of the rich and powerful. The current model
of development assistance is broken and can never deliver any real change of
fortune for the most vulnerable. We need a new model that strengthens people to
engage in the design of their pathway out of poverty and builds economic
resilience.
The current
conditions mirror what happened during the 2008 global financial crisis. In my
time as the vice president in charge of the World Bank’s operations in Africa,
we had to mobilize internal and partner resources to mitigate the severity of
the economic recession suffered by the continent. Exogenous shocks dealt a
lethal blow to the countries’ decade-long steady rises of economic growth,
which had averaged 5 to 6 percent annually until tumbling to 2.4 percent in
2009.
This sharp fall
ended Africa’s upward economic growth trajectory and sent per capita income
tumbling. It increased inequality and the number of Africans in absolute
poverty. Such fragile and low economic growth rates for a continent with one of
the world’s highest concentrations of young people and annual population growth
rate of about 2.5 percent is a key reason for widespread multidimensional
poverty — a threat that carries seeds of global insecurity and instability.
The economic shock
caused by the coronavirus has badly reduced the opportunity Africa would
otherwise have had to lift hundreds of millions out of poverty. The African
Union Commission estimates that Africa’s gross domestic product will shrink by
as much as 4.5 percent, resulting in 20 million job losses.
This has dangerously
hampered the possibility that Africa can generate jobs for young people and
women, or increase literacy levels by reducing the number of out-of-school
children with access to quality learning opportunities. It will result in
lessened ability to reduce maternal and child mortality, improve nutrition and
food security, make reliable energy available and accessible, improve the
availability of quality roads, water, sanitation, and other infrastructure, and
such other investments in public goods.
China, a country
that only within the past four decades has managed to lift more than 850
million people out of poverty, would understand how critical it is for African
countries to accelerate inclusive growth. While economies in Asia, Europe and
the Americas have announced hefty emergency stimulus packages for their people
and businesses, countries in Africa struggle to meet short-term food needs.
Most of Africa’s
countries simply do not have the buffer required for fiscal relief in times of
crisis, because they were already severely constrained by budgetary crises
caused by poor domestic revenue mobilization, high public debts and low
productivity. The parlous public finances of these countries worsened due to
volatility in commodity prices as the pandemic worsened.
Africa faces
frequent shocks caused by climate, terrorism, health issues, food insecurity,
crime and other sources of risk. Most of these perils emanate from the failures
of the rich and powerful economies, but end up inflicting a disproportionate
share of the poor and vulnerable.
China should
demonstrate world leadership by acknowledging its failure to be transparent on
covid-19. Beijing’s leadership should then commit to an independent expert
panel evaluation of its pandemic response. China and the rest of the Group of
20 countries should engage with the Africa Union and countries to design a
reparations mechanism.
It is time for rich
economies to show that our world is capable of doing right by the poor and
vulnerable.
China must pay.
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