Below are some of the main takeaways from COVID-19 Africa Watch’s conversation with Sir Paul Collier, Professor of Economics and Public Policy, Oxford Blavatnik School of Government.

Key Takeaways:

• African economies were hit hard by three main macroeconomic shocks, and were in a weak position to handle them. Those shocks were 1) a decline in commodity prices, 2) a drop in capital flows, whereby investments exited frontier and emerging markets in a “flight to safety,” and 3) a collapse in tourism. These shocks amounted to a reverse wealth transfer, an inadvertent “emergency relief program” from Africa to China and Europe during COVID-19.
• The IMF, the World Bank, and the European Union now have to step in and support African economies, taking advantage of very low global interest rates. However, those African countries that are eligible for borrowing from the International Bank for Reconstruction and Development (IBRD) are largely oil-based economies such as Angola; leaving many very well-run countries (such as Ghana, Rwanda, and Senegal) on the sidelines, although they could make very good use of IBRD loans.
• Countries need a political and economic system that is rooted in social cohesion and mutual obligation rather than in individualism. Denmark, and to some extent China, demonstrate the success of this approach focused on common purpose and decentralized experimentation. So far most African countries have taken the opposite approach, with highly centralized decision-making at the presidential level, and limited ability to forge common purpose, and very limited decentralized experimentation.
• Looking ahead , African countries need to rebuild common purpose (as Rwanda has done), and to seize on the potential of new technologies that strongly favor the continent. Africa has a sizable advantage in its youth, which can best adapt to these technologies. However, successful enterprise growth and innovation requires fuel in the form of finance. And so strengthening access to finance and developing financial institutions in Africa should be a top priority.