The declaration issued at the end of the 18 May ‘Summit on the Financing of African Economies’ hosted by French President Emmanuel Macron offers little to write home about as far as African countries’ immediate pandemic management and debt problems are concerned. The most noteworthy takeaway may be that there is now a broad coalition calling for the re-allocation of Special Drawing Rights (SDRs) from rich to poor countries once the expected International Monetary Fund (IMF) reform materializes later this year.
The summit, which was attended by 29 African and 14 other countries (including several European countries, the US, China, and Japan, among others), was hosted in Paris to discuss ways of providing more support to African countries hit hard by the Covid-19 pandemic. However, rather than offering a grand new vision or concrete financial commitments, the summit communiqué provides mainly references to the established mechanisms concerning Africa’s pandemic management challenges and debt woes.
Regarding the former, support for COVAX and the African Vaccine Acquisition Task Team (AVATT) was re-affirmed, while a general commitment was made to “accelerate these efforts, to make sure more vaccines are allocated to Africa, including through dose sharing, supporting advance market commitments and facilitating trade along the entire value chain, as well as building the local capacities needed to distribute vaccines.” Given the divergent views between EU countries and the US on waiving Intellectual Property (IP) protection for Covid-19 vaccines, the EU is under growing pressure to show how it would support vaccine equity, which is why the communique talked up developing local manufacturing capacities through voluntary IP sharing, transfer of know-how, license pooling and manufacturing agreements.
No major revelations were made concerning Africa’s debt woes either. The declaration simply refers to the G20’s Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI) as the first port of call. To date, only three countries – Chad, Ethiopia and Zambia – have requested debt treatment under the Common Framework. While Chad is the only country where the first meetings under the Common Framework have taken place, the communique merely states that Ethiopia’s and Zambia’s requests “will be discussed”.
The most tangible commitment regarding debt – echoing a less concrete call from April’s G20 summit – was made concerning the pending IMF reform: participants agreed to seek to triple the amount an SDR replenishment would allocate to African countries from USD 33bn to USD 100bn via the – voluntary – reallocation of some of the ‘surplus’ SDRs assigned to advanced economies. The main mechanisms being explored are voluntary on-lending to the IMF’s Poverty Reduction and Growth Trust (PRGT), as well as “additional options with the IMF, World Bank and other MDBs to enable possible on-lending of SDRs to support IMF members’ green, resilient and inclusive recovery,” suggesting that ESG could play a growing consideration in financing. Nevertheless, SDRs are a means to improve liquidity but do not replace IMF loans and associated reform commitments needed if debt were to be restructured. As such, putting a number on the SDRs that may be transferred from rich to poor nations is a small step rather than a big leap forward in addressing Africa’s debt burden.