The Covid-19 pandemic led to a global economic recession, but what has been its impact on African economies?
What makes this crisis unique is not so much its magnitude – Africa has experienced other major crises – but the confluence of multiple crises contained within it.
The Covid-19 pandemic, with its countless victims, has sapped many countries of their vital forces. Some 127 million children in southern and eastern Africa have had their school attendance suspended, with detrimental consequences for their futures.
The economic slowdown has hit every economic sector hard. More than 30 million Africans are estimated to have fallen into extreme poverty in 2021. For the first time in 50 years, the continent has experienced negative growth, jeopardizing development gains.
Into this mix comes the climate crisis and complex security situations in the Sahel and the Horn of Africa, in addition to the impact of the war in Ukraine, especially on food prices. It is still too early to judge the extent of this food crisis, but we already know the Ukraine conflict will have a considerable impact: the price of wheat has already leapt by 24% in Tunisia and 10% in Nigeria, and has also surged in Kenya and Algeria – to the extent that the poorest households can no longer afford to buy bread.
In the face of this multifaceted and far-reaching crisis, what can an institution like the African Development Bank do?
Before even discussing the Bank’s role, let us pay tribute to the African governments that responded quickly: they stepped up their public health interventions, undertook unprecedented monetary and fiscal support operations and expanded social safety nets.
In this emergency context, the Bank’s primary role is to support African governments in their efforts, to mobilize the resources they need and to prioritize the actions most likely to support their initiatives.
That is why our priority has been to mobilize large quantities of quickly- disbursable resources for the most-vulnerable countries. The Bank established the Covid-19 Rapid Response Facility as early as April 2020, and this has mobilized more than $4 billion.
What does that mean in practice for these countries?
Very concretely, it means that countries such as Malawi, Senegal and Côte d’Ivoire have been able, thanks to the Bank, to subsidize water and electricity bills for several months. Nearly 1 million households have benefited in each of these three countries. In Sierra Leone, a particularly vulnerable country, the Bank’s resources have been used to train and equip 11,000 health workers. And in South Africa, 38% of adults and 58% of those aged over 60 have been vaccinated against Covid, thanks to the Bank.
While we have deliberately prioritized public services, the private sector has not been left out: more than 300,000 African small and medium- sized enterprises (SMEs) have benefited from support, such as loan guarantees and affordable financing.
Would you say that a crisis like this is bound to have an impact on the functioning of the Bank?
Absolutely. The Bank has had to be flexible and resilient to adapt to new country priorities. In Togo, for example, where Covid-19 brought food security issues, we have restructured our loans to respond to new emergencies and constraints. But the crisis has also affected our work programme. Last year, more than 60 of our operations, worth as much as $3 billion, had to be reprogrammed in order to prioritize the fight against the pandemic and its consequences. Border closures and travel constraints also hampered our work on the ground: despite all our efforts, one third of our operations experienced delays or implementation difficulties in 2021.
What impact has this had on the Bank’s clients?
Africa and the Bank have shown incredible resilience. Our teams have redoubled their efforts to ensure that our projects achieve their results. Last year, for example, we provided access to safe drinking water or sanitation services to more than 12 million people – that’s triple the target set for 2021! Our investments in the private sector have provided more than 130,000 micro, small and medium-sized enterprises with financial services – that too is double our original target – benefiting more than 3.4 million people.
The African Development Fund, our instrument for supporting the most vulnerable countries, was ranked 2nd out of 49 development agencies for the quality of its development assistance. We have another source of satisfaction in that the Bank was ranked 4th among the most transparent development institutions in the world in 2020.
This international recognition and the results that we achieve every day on the ground encourage us to pursue our development mission without ever giving up on our ambitions.
Climate resilience and a just energy transition are at the heart of these Meetings. How are these issues integrated into the Bank’s work?
As far as the Bank is concerned, they are a priority! In 2021, 92% of our operations were designed to incorporate the issue of climate change, against 75% in 2015. The same goes for our country strategies and policy papers, all of which are developed to take account of the effects of climate change. In 2021, 41% of the Bank’s total commitments supported projects linked to climate funding.
Because combating the effects of climate change in Africa is a top priority, we shall continue to stand with African countries as well as alongside the private sector, to support them in their energy transitions and development of clean and low-carbon energy solutions. They can count on our unwavering support.
Source African Development Bank Group