{
  "title": "Africa’s Hour of Need",
  "publication": "IMF Blog, May 22, 2020",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2020/05/22/vc-africa-s-hour-of-need",
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  "summary": "The region’s expected economic contraction this year is: GDP set to shrink by at least 1.6%, and by 4% in per capita terms.",
  "sections": [
    {
      "heading": "Economic impact and outlook",
      "content": "- The region’s expected economic contraction this year is: GDP set to shrink by at least 1.6%, and by 4% in per capita terms.\n- This will be the region’s sharpest contraction since at least 1970.\n- Formal economic activity has been brutally curtailed across the board due to aggressive containment and mitigation measures (complete lockdowns to border closures).\n- The poor will likely endure the brunt of the crisis: many who earn daily incomes cannot work from home and are required to stay home and practice social distancing.\n- The external environment deterioration compounds domestic challenges, especially tighter financial conditions and sharp commodity-price declines (especially for oil)."
    },
    {
      "heading": "Fiscal and financing constraints",
      "content": "- Many Sub-Saharan African countries have high levels of public debt, limited domestic savings, and drying private external financing options just when they would be most needed.\n- The IMF and the World Bank estimate the region faces a government financing gap (assuming a modestly supportive fiscal stance) of at least $114 billion in 2020.\n- African governments cannot mobilize this amount domestically.\n- The IMF can provide close to $19 billion of rapidly disbursable financing to African countries this year; 26 have already received funding from its emergency facilities.\n- In addition, 19 of the region’s poorest countries will receive direct debt relief, with the IMF Catastrophe Containment and Relief Trust providing grants to cover their upcoming debt-service payments to the Fund.\n- Other partners (World Bank Group, African Development Bank) are ramping up financing.\n- G20 countries have initiated a suspension of debt-service payments until the end of 2020 for poor countries that request relief.\n- Despite these efforts, African governments still face a significant residual financing gap of at least $44 billion for 2020."
    },
    {
      "heading": "Policy priorities and recommended responses",
      "content": "- Critical priority: protect citizens’ health and wellbeing by boosting spending to improve health-care system preparedness.\n- Provide targeted cash or in-kind transfers to the most vulnerable groups.\n- Wherever possible, governments should consider extending liquidity support to small and medium-size enterprises to ensure their survival through this period.\n- Assistance must be provided in a transparent manner and in accordance with the highest governance standards.\n- The case for the international community to bridge the residual $44 billion shortfall is presented as overwhelming to enable fiscal measures that mitigate the pandemic’s adverse effects.\n- International lenders are encouraged to supplement financing to buttress the region’s economic recovery, viewed as a strategic long-term investment."
    },
    {
      "heading": "Strategic rationale and long-term stakes",
      "content": "- One way or another, what happens in Africa will shape this century:\n  - Ten years from now, Sub-Saharan Africa will account for more than half of the annual increase in the global labor force.\n  - The marginal increase in global consumption and investment demand will increasingly come from this region.\n- Healthier populations and climate-friendly urbanization in Africa are linked to a more robust future global workforce and a greener future.\n- The amounts involved are characterized as manageable: $100 billion in new financing to support the region’s economic recovery amounts to only about 2% of the fiscal support that G7 governments have injected into their economies in recent weeks.\n- With global interest rates as low as they are now, the op-ed argues it is an opportune time to commit additional financing to Africa.\n\nOp-ed by Abebe Aemro Selassie, Director of the African Department at the International Monetary Fund; first published on Project Syndicate on May 22, 2020.\n\n---\n\n\n References\n\n- set to shrink\n- government financing gap\n- received funding\n- more than half\n\nSource: https://www.imf.org/en/blogs/articles/2020/05/22/vc-africa-s-hour-of-need"
    }
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    "Authors: Abebe Aemro Selassie",
    "Published: May 22, 2020",
    "The region’s expected economic contraction this year is: GDP set to shrink by at least 1.6%, and by 4% in per capita terms.",
    "This will be the region’s sharpest contraction since at least 1970.",
    "Formal economic activity has been brutally curtailed across the board due to aggressive containment and mitigation measures (complete lockdowns to border closures).",
    "The poor will likely endure the brunt of the crisis: many who earn daily incomes cannot work from home and are required to stay home and practice social distancing.",
    "The external environment deterioration compounds domestic challenges, especially tighter financial conditions and sharp commodity-price declines (especially for oil).",
    "Many Sub-Saharan African countries have high levels of public debt, limited domestic savings, and drying private external financing options just when they would be most needed.",
    "The IMF and the World Bank estimate the region faces a government financing gap (assuming a modestly supportive fiscal stance) of at least $114 billion in 2020.",
    "African governments cannot mobilize this amount domestically.",
    "The IMF can provide close to $19 billion of rapidly disbursable financing to African countries this year; 26 have already received funding from its emergency facilities.",
    "In addition, 19 of the region’s poorest countries will receive direct debt relief, with the IMF Catastrophe Containment and Relief Trust providing grants to cover their upcoming debt-service payments to the Fund.",
    "Other partners (World Bank Group, African Development Bank) are ramping up financing.",
    "G20 countries have initiated a suspension of debt-service payments until the end of 2020 for poor countries that request relief.",
    "Despite these efforts, African governments still face a significant residual financing gap of at least $44 billion for 2020.",
    "Critical priority: protect citizens’ health and wellbeing by boosting spending to improve health-care system preparedness.",
    "Provide targeted cash or in-kind transfers to the most vulnerable groups.",
    "Wherever possible, governments should consider extending liquidity support to small and medium-size enterprises to ensure their survival through this period.",
    "Assistance must be provided in a transparent manner and in accordance with the highest governance standards.",
    "The case for the international community to bridge the residual $44 billion shortfall is presented as overwhelming to enable fiscal measures that mitigate the pandemic’s adverse effects.",
    "International lenders are encouraged to supplement financing to buttress the region’s economic recovery, viewed as a strategic long-term investment.",
    "One way or another, what happens in Africa will shape this century:",
    "Healthier populations and climate-friendly urbanization in Africa are linked to a more robust future global workforce and a greener future.",
    "The amounts involved are characterized as manageable: $100 billion in new financing to support the region’s economic recovery amounts to only about 2% of the fiscal support that G7 governments have injected into their economies in recent weeks.",
    "With global interest rates as low as they are now, the op-ed argues it is an opportune time to commit additional financing to Africa.",
    "[set to shrink](https://www.imf.org/en/News/Articles/2020/04/13/na0413202-six-charts-show-how-covid-19-is-an-unprecedented-threat-to)",
    "[government financing gap](https://www.imf.org/en/News/Articles/2020/04/17/sp041720-2020-Spring-Meetings-High-Level-Virtual-Event-on-Mobilizing-with-Africa)",
    "[received funding](https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker)",
    "[more than half](https://www.imf.org/en/Publications/Departmental-Papers-Policy-Papers/Issues/2018/12/14/The-Future-of-Work-in-Sub-Saharan-Africa-46333)"
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