Plea for ‘Marshall Plan’ as pandemic hits African economies

NIAMEY, Niger – Niger President Mahamadou Issoufou on Friday, April 3, appealed for a “Marshall Plan” to help African economies hit by the coronavirus pandemic as more states warned of a devastating impact on the continent’s growth.

“Even before the pandemic, Africa needed a Marshall Plan for its development, to fight poverty. This pandemic is a further argument to justify the need for a plan,” Issoufou said in an interview on the French news channel France 24.

“Even more-developed countries are overwhelmed,” said Issoufou, whose landlocked Sahel state is one of the poorest in the world.

“Our means are weaker, our health systems are more fragile. So we need a very strong show of solidarity to confront this crisis.”

The Marshall Plan, named after the then-US secretary of state, George Marshall, who conceived it, was a program of aid to rebuild the economies of western Europe after World War II.

Issouffou spoke after his country, Ivory Coast, and Burkina Faso gave early notice that the pandemic has devastated their prospects for growth.

Burkina Faso on Thursday, April 2, slashed its expectations of gross domestic product (GDP) growth for 2020 from 6.3% to 2%.

On Tuesday, March 31, Ivory Coast estimated its growth rate would be halved to 3.6%, while Niger Finance Minister Mamadou Diop predicted growth this year would be 4.1%, compared with an earlier forecast of 6.9%.

The country’s budget deficit would widen from an expected 2.6% of GDP to 3.7%, Diop said.

Like neighboring Mali, Niger and Burkina Faso are in the grip of bloody jihadist revolt that has claimed thousands of lives and displaced hundreds of thousands of people. Niger alone is hosting nearly 450,000 people.

On Thursday, the United Nations’ World Food Programme (WFP) said more than 5 million people in those 3 countries are facing hunger.

“Our message to the world is clear – look away now and the consequences will be no less than catastrophic,” its West Africa director, Chris Nikoi, said.

Other parts of Africa could be hit by a shock to food supplies.

Sub-Saharan Africa imported more than 40 million tons of cereals last year – a lifeline that could be crimped by the shock to world trade.

Somalia and South Sudan are the most exposed to any disruption in grain supplies, while others such as Angola, Nigeria, and Chad depend on exports to pay for food imports, the WFP warned. (READ: Virus restrictions ground most of Africa’s airlines)

Aid and debt relief

As the pandemic starts to bite, much of the focus on aid for Africa is on debt alleviation.

On March 25, the International Monetary Fund (IMF) and World Bank urged a freeze on debt repayments “to provide a global sense of relief for developing countries as well as a strong signal to financial markets.”

That came two days after African ministers called for $100 billion in “immediate emergency economic stimulus” including the waiver of debt interest payments.

France and the European Union (EU) have responded positively to the call for help, but European budgets are already badly under strain because of the crisis.

French Finance Minister Bruno Le Maire on Thursday said he supported a debt moratorium for “the poorest countries” and a $500-billion increase in special drawing rights (SDRs), the currency of the IMF.

He also suggested “a swift new credit line to complement swap lines between central banks” to support countries are most in need.

Swap lines are temporary reciprocal currency arrangements between central banks primarily aimed to keep liquidity in the currency available, especially for countries which have debt in US dollars.

“Even if you solve the problem in Europe it will not be solved if it is not solved everywhere,” EU foreign policy chief Josep Borell observed on Friday, after talks with the 27 member countries.

“Africa is of particular concern to us because the pandemic there could get out of control very rapidly.”

EU development ministers will hold talks next Wednesday, April 8, on putting together a financial package, based on contributions from EU institutions as well as member state governments. – Rappler.com