COVID-19

COVID’s Aftershocks in Africa: Get ready for a new debt crisis

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A roundup of the latest news, stats, and analysis of COVID-19’s impact in Africa. View our data tracker and sign up for our weekly newsletter here, and read on for Buhari’s medical jaunt to London, big pharma’s power grab, and how teachers have been abandoned. But first, buckle up for a new debt crisis.

Top news

Buckle up: IMF head Kristalina Georgieva said the world should prepare for an emerging market debt crisis triggered by “significant” capital outflows if interest rates rise — something that happened during the “taper tantrum” in 2013. Middle-income countries with large external financing needs and elevated debt levels like Nigeria would be hard hit. A new policy brief from ONE shows $42 billion for Africa is at stake based on decisions made by G20 finance ministers in the coming months.

Great divergence: In a curtain raiser for the World Bank-IMF Spring Meetings, Georgieva said what we do now will shape the post-crisis world, with a significant risk of a “great divergence” as rich countries vaccinate their people and recover economically, while poor countries cannot. New IMF research shows low-income countries face a financing gap of $200 billion for the recovery and another $250 billion to get back on track with fighting poverty. Given the positive news about a potential $650 billion allocation of Special Drawing Rights, the vast majority should be spent on this recovery rather than sitting in the accounts of rich countries that are awash with cash. If you need an explainer on this, we’ve got you covered with our new Monopoly video

Lookout: Next week ONE will launch a brand new Africa COVID-19 Tracker with the latest trend data on the health, social, and economic impacts of the pandemic. Tell your friends to sign up to Aftershocks now so they don’t miss any updates.

Flying doctors: Nigerian President Muhammadu Buhari flew to London for a routine medical checkup two days before the country’s doctors are due to go on strike over unpaid salaries. ONE’s analysis of Nigeria’s 2021 federal government budget shows a decrease in health spending to 4.4% of the budget. In contrast, debt service makes up 24.5% of spending.

Good standing: Sudan is back in good standing with the World Bank after the US helped the country clear its arrears. This is not theoretical. $215 million will be immediately available for budget support and $420 million for the Sudan Family Support Programme. Prime Minister Abdalla Hamdok has been working hard to reverse decades of damage done by his predecessor, including securing the lifting of US sanctions. This latest move will allow Sudan to access debt relief through the Heavily Indebted Poor Countries Initiative.

Dangerous game: Days after Madagascar’s president, Andry Rajoelina, came under fire for casting doubt on the safety of COVID-19 vaccines, saying that he didn’t plan to get one, the government joined COVAX. Rajoelina has spent the past year touting an unproven herbal remedy: a similar approach to his late colleague John Magufuli of Tanzania. Kenya, Ethiopia, and Côte d’Ivoire are facing a third wave of COVID.

(Ca)sino: New data on Chinese lending to Africa show loan commitments of $153 billion, down 30% from 2018. Top borrowers were Ghana, South Africa, Egypt, Côte d’Ivoire, and Nigeria. Over 30 Chinese lenders are in play — and since 2013, commercial (rather than concessional) loans have played a bigger part in the lending that favors big projects: loans averaged $180 million. Here’s a useful viz of the World Bank’s international debt statistics data.

Fragile state: “All it takes is a gust of wind and a poorly cooked bat to disrupt global supply chains.” So said a shrewd commentator in the Financial Times. Egypt’s Suez canal was unblocked on Tuesday after a ship was blown off course in one of the world’s busiest trade routes — but only after five days of herculean efforts, costing an estimated $35 billion in trade disruption. The traffic jam in the canal will take some time to unblock. The long way around Africa takes an additional 10-15 days and costs $300,000 in tanker fuel. Another reminder that we need to build resilience to new kinds of disruptions and threats.

Mergers and annihilations: A new “double mutation” of the coronavirus has been discovered in India; two variants joined to form a third. New strains of COVID emerging from countries with low vaccination rates could yield current vaccines ineffective within a year. So said a survey of leading epidemiologists and disease specialists.

Enough! The world has procured enough vaccine doses to reach herd immunity globally, according to new data from Duke University. But that won’t happen because of hoarding. 0.2% of doses administered have been in low-income countries. In better news, the African Union signed a deal with J&J for 220 million doses in 2021. The deal will allow for another 180 million doses next year.

Power grab: Many complain about the power of big tech. But a new IMF study shows the market concentration, profitability, and mark-ups in pharma have exceeded any other sector. Since 1995, markups increased around 40%, concentration rose around 80%, and profitability doubled. Rich countries continue to block a proposal from South Africa and India to temporarily waive IP on COVID-19 treatments.

Abandoning teachers: Only 19% of countries include teachers as a priority group for being vaccinated against COVID-19, according to a new education tracker. Students have returned for in-person instruction in 85 countries.

Let’s prepare: A panoply of world leaders signed an opinion piece calling for a new treaty on pandemic preparedness. African leaders Kagame, Kenyatta, Ramaphosa, and Sall joined a number of G20 and other leaders. This is a really positive signal on cooperation. So it’s perhaps churlish to point out that many signatories are doing the very things they are calling for the new treaty to stop. The two people crucial for the treaty’s success were notably absent: Biden and Xi.

The numbers

  • $450 billion: The financing gap for low-income countries left by COVID-19, according to the IMF.
  • 135 years: The number of years it will take to close the global gender gap, given current trends.
  • 0.2% of vaccine doses administered have been in low-income countries.

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