The International Monetary Fund (IMF) has revealed that, to ameliorate the harsh economic effects of COVID-19, Nigeria and other countries in sub-Saharan Africa will need additional external funding of $425 billion.
This was contained in its latest Regional Economic Outlook for Sub-Saharan Africa released on Thursday in which it said that although the region’s economy was projected to grow by 3.4 per cent this year (recovering from the 1.9 per cent contraction in 2020), it is forecast to lag behind the rest of the world due to limited access to COVID-19 vaccine.
The IMF also noted that its near-term outlook for the region is “subject to considerable uncertainty related to the course of the pandemic, access to vaccines and the more challenging external financing environment.”
The finance body also warned that more than 32 million people in sub-Saharan Africa are being pushed into poverty by the economic impact of the pandemic and that per-capita output may not return to prepandemic levels until after 2022 or even 2025.
It estimated that some countries in the region – aiming to vaccinate 60 per cent of their populations – would need to increase their health spending by 50 per cent.
“If supply and distribution issues continue, most countries will struggle to reach herd immunity before the end of 2023, leaving them exposed to new, more virulent strains of the disease.
“For the international community, ensuring vaccine coverage for sub- Saharan Africa is not simply an issue of local livelihoods and local growth.
“Broad regional coverage is also a global public good,” the Bretton Woods institution said.
Apart from significant additional external concessional financing to support reforms in sub- Saharan Africa, the IMF said efforts should also be made in the region to boost economic growth, diversification and contain debt vulnerabilities.
The Director of IMF’s African Department, Abebe Aemro Selassie, while speaking on the report, said: “Sub-Saharan Africa is continuing to grapple with an unprecedented health and economic crisis.
“Since our last assessment of the Regional Economic Outlook in October 2020, the region has confronted a second pandemic wave, which outpaced the scale and speed of the first. And many countries continue to face or are bracing for further waves, particularly as access to vaccines remains scant.
“The pandemic has had a devastating impact on the region’s economy.The estimated 1.9 per cent contraction in 2020 is somewhat less severe than anticipated last October, but it is still the worst year on record. While the region is projected to grow by 3.4 per cent in 2021, per capita output is not expected to return to 2019 levels until after 2022.
“The economic hardships have caused significant social dislocation, with far too many being thrust back into poverty. In many countries, per capita incomes will not return to pre-crisis levels until 2025.
“The number of extreme poor in sub-Saharan Africa is projected to have increased by more than 32 million. The ‘learning loss’ has been enormous, with students missing 67 days of instruction, more than four times the level in advanced economies.
”Selassie said that given that the immediate priority in the region is to save lives, more funding should go into strengthening health systems and cover vaccine procurement and distribution, adding that excess doses in wealthy countries should be redistributed quickly.
“The next priority is to reinforce the recovery and nurture the region’s growth potential through bold and transformative reforms. These include digitistion, trade integration, competition, transparency and governance, and climate-change mitigation,” he added.
He stressed that while the international community, including the IMF, had moved swiftly to help cover the region’s emergency needs last year, further support will be essential to regain ground lost during the crisis.
He cited the potential general allocation of Special Drawing Rights (SDR) from the fund, which, he said, would help provide liquidity to most vulnerable sub-Saharan African countries.
Speaking further, the IMF director said: “To help boost spending on the pandemic response, maintain adequate reserves and accelerate income convergence, sub-Saharan Africa’s low-income countries face additional external funding needs of about $245 billion over the next five years or $425 billion for the whole region.”
