As the world continues to agonize under the COVID-19 pandemic, countries have been putting in place significant fiscal policy measures to thwart the sudden crawl of economic activities and the strain in health care. Many developed economies have put in place measures to ensure that sectors, businesses and households survive the pandemic. Understandably, African countries’ efforts to prevent and control COVID-19 infections continue to be hampered by current poor health systems and infrastructure, which is a sub-set of the socio-economic challenges bedeviling the continent.

In developed economies, governments have released stimulus packages to cushion businesses and citizens while offsetting immediate pandemical costs. Some of the stimulus measures include a pause on mortgage and rent payments, bailouts for business and airlines and cheques for the unemployed. This is despite the fact that they have strong advanced economies and well-funded healthcare systems. The USA has initiated a USD 2trillion package called CARE (Corona Aid and Relief Emergency), Switzerland USD 10.6 billion and USD12 billion for Indonesia. The situation is different in Africa, the  IMF’s Policy Response to COVID-19 Tracker  posits that so far, the spending plans of countries in sub-Saharan Africa is 0.26% of GDP on average, which is considerably lower than the average of countries in Europe, Central Asia and North America at 9% and 11.5% of GDP, respectively.

African economies lack the financial muscle to invest a fraction of what big economies have invested so far. Public health systems are under-funded, there is a health personnel shortage due to brain drain to developed economies, health workers are less committed due to poor remunerations and IMF has induced wage freezes and non-civil servants’ recruitments. Africa needs resources to procure protective equipment for health workers in the forefront of the fight against Covid 19. The scarcity of ventilators, machines, drugs and training of staff is glaring.

Concerning debt levels and servicing, many African countries were already facing heightened debt vulnerabilities and rising debt costs even before the Covid-19 pandemic.  The IMF reports that in sub-Saharan Africa, governments’ debt as a share of GDP grew from 31.7% (between 2010-2015) to 50.4% in 2020 with countries like Cape Verde, Mozambique and Angola recording debt levels as high as 118.9%; 106.8% and 90% of GDP respectively.   For many years, these countries have been spending more on debt servicing than on healthcare and education combined.

While the creditor community led by the IMF  approved debt service relief  of USD 1.4 billion to 25 countries under the IMF’s revamped Catastrophe Containment and Relief Trust (CCRT) as part of the Fund’s response to help address the impact of the COVID-19 pandemic, MORE African country are still heavily overwhelmed by the health crisis. African governments can however achieve quick wins without waiting on the international community through implementing various home-grown economic policies to curb COVID -19. AFRODAD fronts the following economic and financial recommendations:

  • African governments need to come up with their own COVID-19 home grown economic and financial packages;
  • Covid 19 DEBT relief resources must be utilized to strengthen current poor health systems and infrastructure. They should be protected from misuse and corruption;
  • Civil society needs to monitor the usage of all debt relief funds extended to countries as they did during the HIPC/MDRI period 1996 – 2005;
  • African governments must mitigate an economic slowdown through fiscal measures such as tax breaks and specific subsidies for companies and individuals, and non-fiscal measures to stimulate exports and imports;
  • Most companies in the formal sector will need reduction in corporate income tax to foster survival. There is need for income tax exemption for employees in the formal sector;
  • Africa’s informal sector employs large numbers of people. Governments need to institute packages that contain subsidies for basic needs;
  • In country development partners need to support government, private and religious sectors, NGOs and individuals’ efforts to fight the pandemic;
  • Governments must conduct a more comprehensive evaluation of the impact of COVID-19.




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