Key Takeaways
The following are a few of the main takeaways from COVID-19 Africa Watch‘s conversation with Dr. Vera Songwe, Executive Secretary of the United Nations Economic Commission for Africa and U.N. Under-Secretary General:
In much of the world, the health crisis caused by COVID-19 hit first. But in African countries, the economic crisis has come first.
COVID-19 has underscored the importance of intra-African trade for economic resilience and for the AfCFTA as an essential architecture for ensuring medical supplies and other goods manufactured in Africa can travel seamlessly across the continent.
Improving technological access and ICT infrastructure is central to ensuring health systems can cope with increased stressed the pandemic is causing.
The initial global response has provided much-needed liquidity, but Dr. Songwe calls for “more global solidarity” both in ensuring access to eventual COVID-19 treatments and in helping African countries recover economically.
The interview was conducted by Lilian Best, Secretary to the Board of Governors of the Central Bank of Liberia and IFC-Milken Institute Capital Market Scholar. A transcript is available below.
Transcript
Interviewer
My name is Lillian best. I’m from Liberia, and I am the Secretary to the Board of Governors of the Central Bank of Liberia and a fellow of the International Finance Corporation-Milken Institute Capital Markets Program. Today, I’m pleased to welcome Dr. Vera Songwe, who joins us to share her insights on the COVID-19 crisis from Africa’s perspective.
Dr. Songwe, you are a Cameroonian economist now serving as the Executive Secretary of the United Nations Economic Commission for Africa, a role you’ve held since August, 2017, based in Addis Ababa, Ethiopia. My first question to you: you’ve contributed extensively to the discourse on the African Continental Free Trade Agreement (AfCFTA, for short), including your views on what next steps the continent needs to take to seal that agreement as a catalyst for major growth. With that drive being overtaken by COVID-19 what are the priorities now in terms of leveraging AfCFTA to facilitate the reopening of Africa’s economies and the recovery post COVID-19?
Dr. Vera Songwe
Thanks, Lilian. Thanks to the Milken Institute for having me on this call today. I think what we want to maybe remember as we think about COVID-19 and what are the things that we can do for exit, there are three things we want to think about. The first one is that this is a global pandemic, and as a global pandemic it has also affected the continent, first of all, economically. I think for many countries it’s been first the health hit and then the economic hit. On the continent, it’s been the economic hit before the health hit, and that’s why the AfCFTA, African Continental Free Trade Area agreement is an important element of the solution for three reasons. One, it is it’s a trade agreement, and the only way we know how to actually regrow economies is through trade. So the AfCFTA is going to be an important element of the architecture building back and getting out of this crisis, but before we do that, your question about how do we exit.
“One of the things that we have seen during this crisis is the resilience of our private sector from Tunisia to South Africa to Morocco to Senegal, we see the private sector developing test kits, developing PPE, and the Continental Free Trade Area agreement is the architecture for ensuring that these goods can travel across the continent.”
I don’t think that we can really and seriously exit the crisis if we have not yet gotten up to speed on tracing and testing and isolating and ensuring that we have the right strategies for bringing down the numbers. And again to do that ,one of the things that we’re working on is making sure that we can actually trade goods across the continent in a way that is seamless.
One of the things that we have seen during this crisis is the resilience of our private sector from Tunisia to South Africa to Morocco to Senegal, we see the private sector developing test kits, developing PPE, and the Continental Free Trade Area agreement is the architecture for ensuring that these goods can travel across the continent. So that we can create jobs in one part of the continent, but also supply a much needed goods across the continent.
The third thing about the CFTA is that Africa comes together to trade with the rest of the world. When the COVID-19 crisis hit, 54 countries closed their borders, to particularly food and health goods. I think when African says if you close your border, you close your border to all of us, it’s much easier for those countries to reopen. And we’ve seen that with India already. So I think the AfCFTA also gives Africa the kind of scale that it needs for negotiating capacity.
Interviewer
Going forward post-crisis— You’ve talked in the past about it and you’ve written about what the priorities are for African countries to really implement AfCFTA and that comes in even in the best of times with some trade-offs in terms of lowering fees and foregoing immediate revenue generation for future gains. In a time when Africa is especially constrained financially, how do policymakers square that circle and really make those tough decisions about how to manage this crisis?
Dr. Vera Songwe
The question when we come out of this crisis or as we come out of it—I think we will come out of it and hopefully soon—will be, how can we create jobs? How can we get our economies back open again and how can we begin to create more value for people and ensure that we don’t let more people fall deeper into poverty than I already have?
And again, when you look at the CFTA today… Before actually we got into the crisis, the Economic Commission for Africa had done a study on pharmaceutical products, actually the health sector overall. (It was for research. We didn’t know that COVID-19 was coming.) But we found US$14.9 billion is spent importing health drugs from outside of the continent. And what we were trying to do following up on that study was essentially to say, Can we produce at least some portion of those drugs on the continent? Can we create jobs?
And that led to an initiative that we call the Pooled Procurement Initiative, which was essentially looking at how can we then cluster sub-regions or countries and then begin to see whether we can do mass production. Because before you do that kind of production and those kinds of agreements, you need some off-taker agreements to be put in place. So we were actually working on that.
The idea was that US$14.9 billion was equivalent 6 million jobs, so our argument was, we are exporting 6 million jobs outside the continent when we need to create jobs on the continent. Could we at least create 3 million jobs on the continent in the pharmaceutical sector using the CFTA? And the reason being that, if we could then make sure that all the pharmaceutical products that were produced on the continent could move across and could be traded in the sub-region, then we were getting what we wanted. So this is a very clear issue that governments will have to think about as they get out.
Now linked to that is the whole idea of technology and ICT. One of the big issues around drug production is actually counterfeit drugs in the system. Actually, to fight the counterfeit drugs in the system what we really need is technology. We can sort of follow the blackholes and work more effectively. So as we get out of this crisis, again we have seen even for the testing, tracing, isolating, and treating patients that we need a very sophisticated and very good ICT systems in place. Today on the continent less than 20 percent have access to the internet and less than 15 percent can actually afford it even if they have access to it. So we’re going to be able to, we are going to need to, one, reduce prices for ICT and, two, increase access and ensure that you have broadband stability so that more people can use it. I think that’s the second thing.
“We need FDI to come back in, and the only way that we can do that is by increasing the transparency of the use of government resources as we get out of this crisis.”
Finally, infrastructure, I want to discuss our institutions first as a big part of the infrastructure we need to build. We’re seeing the weaknesses in our health institutions. We need to fix that. Infrastructure in the energy sector, we’re going to have to do much, much better. And then overall governance. We’re going to have to do a lot better at governance as we get out of this. Governance, by improving private sector businesses, by improving the environment. You know this very well, Lilian. We are not going to get business back, and we need FDI to come back in, and the only way that we can do that is by increasing the transparency of the use of government resources as we get out of this crisis, so people can trust again in the credibility of our governments and reinvest in them in a way that then— all these things that I have said, creating jobs means taxes. If those jobs are legal and formal jobs, you get taxes created.
One of the fastest growing sectors today, even inside the crisis actually because of the crisis is this medium. We’re using technology, right? And so a lot of the taxes that they’re going to be created these days are going to come from the technology and the services sector. Africa, 51% of African GDP was already the service sector. We need to do that well, we need to do that better. And then of course infrastructure helps create enabling environment for that.
Interviewer
In the context of the G20-Africa partnership, and in the context of ongoing talks with the IMF for debt relief for poor countries, what could the global community be doing better? What is it doing well? And what could it be doing better to support Africa’s fight against the pandemic?
Dr. Vera Songwe
There’s a lot that’s good that’s happening already. We’re very grateful and thankful for the World Bank and the IMF and for the G20 debt sustainability service initiative that essentially is saying, we know we need to give more liquidity to Africa so that Africa can respond to this health and then economic crisis. So I think there has been a coming together of the international community. I think we still need a stronger coming together on the health side. There’s still a lot of debate about who gets the vaccine, who doesn’t get the vaccine. I mentioned earlier in the context of the discussions on trade, the fact that countries were closing their borders to exports of both health but also food products. I think we need a little bit more global solidarity, a little bit more multilateralism in how we’re going to work around some of those issues that need to be done.
But Africa itself, I think, first starting with the African Union under the leadership of President Cyril Ramaphosa has come together. The presidents meet quite often to discuss what are the ways in which they can work together to come out of this crisis. I think we have seen, companies, Ethiopian Airlines, for example, serving the rest of the continent, distributing pharmaceutical products. We have seen—yesterday was Africa Day—artists from across the continent coming together to see how they can collectively and collaboratively work.
Another thing that I think has come out of this crisis is the innovation on the continent. Countries doing PPEs, for example, I think that solidarity, collaboration, and innovation, businesses deciding to repurpose their factories to produce what was needed in the countries in which they are in and then eventually for exports. I think this has been fascinating.
The innovation that we see in Senegal with this young kids doing new toolkits or in Morocco, in South Africa with ventilators I think just demonstrates the resilience, but also the innovation and also the can-do spirit of the continent.
“We must come together and say that Africa, like any other continent in the world, requires immediate and urgent action.”
Now we need again, at the end of the day, to be able to find the financing that is required in the right format. And I think, many countries have given themselves stimuluses 10, 20 percent of GDP. Africa is asking for US$100 billion of fiscal stimulus and the release of some special drawing rights for the private sector to ensure that both on the fiscal side but also on the private sector business side and foreign exchange access, so we can have some room to be able to respond to the crisis. I think we’re still seeing, still struggling to get out of that conversation, and I think we must come together and say that Africa, like any other continent in the world, requires immediate and urgent action. We cannot take too long to see how we react to this. Otherwise, I think the consequences, again, you know— if one of us has it, all of us have it. So there is no way of saying that we’re going to help part of the continent and not help the other. So as the Economic Commission for Africa, we are calling for support for all of the African countries to provide some additional liquidity so that they can continue to respond as effectively as they have done to the crisis.
Interviewer
Dr. Vera Songwe, thank you for your insights. Thank you for your time. Happy belated Africa Day, and please stay safe.
Dr. Vera Songwe
Thank you. You too. Thank you very much.