After years of successfully tapping international capital markets, countries from Nigeria to Madagascar are turning to the IMF and World Bank. Since March 16, the IMF has pledged $993 million and the World Bank $1.53 billion, according to EXX Africa, a risk consultancy.
Nigeria, the continent’s biggest economy, is in talks for $7 billion of support from the two lenders and the African Development Bank. The Abidjan-based institution has set aside $10 billion to aid economies decimated by the virus fallout.
While it’s a start, the region will need much more. The World Bank has predicted the first recession in sub-Saharan Africa in 25 years with an economic contraction of as much as 5.1% in 2020.
South African Finance Minister Tito Mboweni.
Photographer: Waldo Swiegers/Bloomberg
Goldman Sachs forecasts sub-Saharan Africa’s funding needs will rise by $75 billion. It sees significant contraction in the economies of the continent’s two powerhouses, Nigeria and South Africa, and expects the economies of Angola and Zambia to shrink by 9%. Seychelles, which relies on tourism, this week joined Zambia in seeking to reorganize its foreign debt.
As ever, there is a holdout. While South Africa’s finance minister has said the country is open to approaching the IMF for the first time, his opponents within the ruling party have said that would equate to giving up the nation’s sovereignty.
With an unprecedented crisis at hand, African nations will need to put aside political considerations and eschew infighting if they are to avoid seeing hard-won economic gains rolled back.
It may be a case of accepting help where it can be found.
— Antony Sguazzin