Paris summit mobilises finance, vaccines for Africa ‘New Deal’ | Business and Economy News

A Paris summit Tuesday promised to help Africa overcome the coronavirus pandemic with a “New Deal” using global financial firepower to replenish depleted coffers and ramp up a sluggish vaccine rollout.

The summit, which brought together African leaders and global financial institutions, launched “a New Deal for Africa and by Africa”, host French President Emmanuel Macron told a news conference.

According to the latest AFP news agency tally from official sources, there have been a total of nearly 130,000 coronavirus deaths among African populations during the pandemic, compared with almost 3.4 million worldwide, although experts believe the official tolls in African countries could be undercounts.

The economic cost of the pandemic has been devastating, with the International Monetary Fund warning in late 2020 that Africa faces a shortfall of $290bn up to 2023, undermining all efforts at development.

Meanwhile, a slow vaccine rollout has raised concerns that variants could emerge on the continent that would then spread worldwide.

The summit was dominated by fears that while richer nations were launching economic recovery packages, Africa lacked the means to follow suit, and risked increased inequality and consequently insecurity.

“We cannot afford leaving the African economies behind,” said the summit’s final declaration.

Call for vaccine patent waivers

Macron said there was also great inequality in terms of limited African access to coronavirus vaccines, and the summit hoped that patents would be lifted so Africa could begin to produce its own jabs.

Citing the slow pace of vaccination as a major problem for the continent, Macron sought the vaccination of 40 percent of people in Africa by the end of 2021.

“The current situation is not sustainable, it is both unfair and inefficient,” he said.

“We are asking the World Health Organization (WHO), the World Trade Organization (WTO) and the Medicines Patent Pool to remove all these constraints in terms of intellectual property which blocks the production of certain types of vaccines,” Macron added.

Senegal President Macky Sall hailed a “change of mentality” in the approach, with G20 nations realising their own wellbeing depended on vaccine progress in Africa.

“We have a common responsibility; vaccinating one’s own populations does not guarantee health security,” he said.

“This is a great opportunity for Africa,” Congolese President Felix Tshisekedi, the current head of the African Union, said. The pandemic “left our economies impoverished because we had to use all the means we had, the few means we had, to fight against the disease.”

IMF chief Kristalina Georgieva warned that failure to accelerate the vaccine rollout in Africa would also have economic consequences.

“It is clear that there is no durable exit from the economic crisis unless we exit the health crisis,” she said.

On the finance front, “we will leverage on the international financial system to create the much-needed fiscal space for African economies,” the closing statement said.

The signatories said they would now push for the rapid general allocation of $650bn worth of special drawing rights (SDRs) by the IMF to all its members, of which approximately $33bn would go to Africa.

SDRs are a reserve asset used to bolster the financial position of IMF members, based on a basket of currencies, which can be converted for much-needed dollars.

France’s President Emmanuel Macron speaks during a joint news conference at the end of the summit [Ludovic Marin/Reuters]

The United States has been pushing for such an IMF payout to counter the economic impact of COVID-19, including low-income countries.

Macron told the news conference that several rich countries had agreed to turn their share of the SDRs over to African countries because $33bn “is too little”, hoping that voluntary contributions could boost the African share to $100bn, to which the IMF could add some of its gold reserves.

Some experts have criticised SDRs for being easy money for fiscally irresponsible nations, and Tuesday’s declaration urged countries “to utilise these new resources transparently and effectively”.

‘Champion of global growth’

Summit leaders promised that they would seek to complement the SDRs with “flexibility on debt and deficit ceilings”, but they also urged countries to undertake “necessary reforms at the national level”.

Italian Prime Minister Mario Draghi, a former boss of the European Central Bank, promised the summit’s proposals would be supported by the G20 group of countries, and “in all multilateral institutions around the world”.

Debt restructuring would feature large in efforts to help Africa, Draghi said.

Georgieva said there was “a very dangerous divergence between advanced economies and developing countries, especially Africa”.

French President Emmanuel Macron grabs the president of the African Development Bank Akinwumi Adesina next to Ivory Coast President Alassane Ouattara, right, before the opening session of Tuesday’s summit [Ludovic Marin/Reuters]

African economic growth was on course for just 3.2 percent this year, far behind the rest of the world’s projected 6 percent, she said.

The African Development Bank forecast that up to 39 million people could fall into poverty this year, with many African countries at risk of debt distress because of the pandemic.

The summit welcomed a moratorium on the service of public debt agreed to in April by key global lenders.

The summit came a day after a conference on Monday attended by several heads of state that aimed to rally support for the Sudan government.

The leaders attending Tuesday’s summit are also expected to discuss debt relief initiatives and how to reduce interest rates for Africa’s private sector to boost investment and growth.