The COVID-19 crisis is severely straining African economies, threatening to undermine decades of progress and jeopardize long-term goals, including economic transformation. But there are certain policy measures that, if prioritized, can help economies rebound more quickly after the immediate crisis and keep the transformation agenda on track.
As Africa entered a new decade, there was sustained, if not vibrant, optimism for the future. Many of the continent’s economies were continuing to grow, while poverty was continuing to decline. But as the total number of COVID-19 cases soar globally, the International Monetary Fund (IMF) expects economies to shrink during 2020 in at least 170 countries, with Africa hit especially hard. The World Bank has forecast that growth in sub-Saharan Africa could contract by up to 5.1 percent in 2020.
Many African governments have moved quickly, enacting “stay at home” measures and emergency fiscal and monetary policies. For example, Ghana committed $100 million to support preparedness and response, and another $166 million to support selected industries, while the South Africa Reserve Bank has reduced the policy rate by 100 bps to 5.25 percent and announced measures to ease liquidity conditions. To support these efforts, the African Union and the Economic Commission for Africa are tracking policy measures and providing advice, while the African Development Bank floated a $3 billion “Fight COVID-19” social bond. The international community is also responding with various measures of emergency relief such as loans and grants, while the G20 agreed to temporarily halt debt payments for the world’s poorest countries.
However, even after the immediate COVID-19 crisis abates and the necessary economic and social adjustments are made, African governments and their development partners must ensure that Africa’s transformation agenda—which is critical to the continent’s long-term sustainable and equitable growth—is not permanently derailed. In fact, governments should use the urgency of the COVID-19 crisis to make meaningful policy changes that will not only help in the short term but also strengthen the long-term recovery efforts.
What follows are ten key transformative policy priorities for Africa in the aftermath of the pandemic: economic “rebound” measures that will help position economies for a more rapid and sustainable period of growth. They are organized in four broad categories: resource mobilization and management; governance, effectiveness, and transparency; business and investment environment; and industrial, manufacturing, and digital innovation.
While there are many policy considerations across all sectors—first and foremost in public health, which is widely understood and not included here—the actions emphasized below provide a balanced approach for both immediate relief and longer term economic transformation. They are not necessarily new recommendations; in many cases these are actions that should be taken regardless of the pandemic. But now, they are more critical than ever to recapture the gains lost—and to keep the transformation agenda on track.