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THE Common Market for Eastern and Southern Africa (Comesa) has advised Sub-Saharan Africa countries to prioritise medium term policy interventions to reduce worsening debt distress in light of the Covid-19 pandemic.
Sub-Saharan Africa includes the 21-member Comesa region that has countries such as Zimbabwe, Namibia, Zambia, Swaziland, Rwanda and Lesotho.
Following the outbreak of Covid-19 in China in December 2019, it has spread to all continents, weakening economies as nations embarked on lockdown measures to curb the spread of the viral infection.
“Most countries in Sub-Saharan Africa, which includes the Comesa region, need to prioritise medium term policies such as structural transformation and economic diversification of individual economies, reforms in revenue mobilisation and increasing trade integration to deal with the worsening debt situation caused partly by the Covid-19 pandemic,” said Comesa in a statement.
The bloc’s Monetary Institute senior economist, Dr Lucas Njoroge, was quoted saying long-term policy priorities should ensure that debt plays a meaningful role and is used for revenue generating activities that increase productive capacity of regional economies.
“Countries should borrow smarter, understand their real needs, ensure good terms and effective management of their debt while holding creditors to higher standards on transparency and sustainability,” he said.
African countries have also been urged to ensure proper evaluation of returns on capital projects to a certain economic viability, technology and skills transfer. This includes building local capacity to operate the projects in the long term.
“Fiscal stimulus targeting public health, crisis response and income support to the most vulnerable for the countries that are still severely affected by the pandemic should continue,” said Dr Njoroge.
“However, for countries that have managed to bring the pandemic under control, it will be important to start unwinding some of the fiscal measures that had been put in place to support lives and livelihoods.
“This will help reduce pressure on government finances, thereby release resources to support aggregate demand.”
Comesa has also noted that saving lives and protecting livelihoods especially now when the second wave of the pandemic seems to be more aggressive, should be among the immediate policy priorities.
It said countries should continue with public health efforts including contact tracing, quarantine, isolation and treatment.
Dr Njoroge said debt in most Sub-Saharan African countries was already increasing before Covid-19 so the pandemic has worsened the situation.
The slowdown in economic activities following partial or full lockdowns and general economic slowdown, he said, were all exerting considerable pressure on government finances. This has been cited as leading most governments to run wide fiscal deficits that are slowly translating into increasing debt and debt distress.
Experts say Sub-Saharan Africa could leverage on the African Continental Free Trade Area, which has just begun to strengthen value addition and industrial growth to manage the debt crisis.
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