With Africa seeing its first recession in over 25 years as a result of COVID-19, France has united with leaders from across Africa and Europe in calling for the Special Drawing Rights (SDRs) of rich countries to be reallocated to Africa.
At the Sustainable Financing for Africa summit — which took place in Paris on Tuesday — leaders stressed that there can’t be any post-COVID recovery if African nations aren’t taken into account. The event brought together 30 African and European leaders with heads of global financial institutions.
SDRs are a critical financing tool developed by the International Monetary Fund (IMF) to support the world's most vulnerable nations. This internal currency can be traded between countries in exchange for liquidity or cash and can be used to buy medical supplies and food.
In April, G20 finance ministers and central bank governors called on the IMF to allocate an unprecedented $650 billion in SDRs, of which $34 billion would go to African countries, to support the global recovery from the COVID-19 pandemic.
The summit this week was one of the biggest in-person top-level meetings held during the pandemic. It sought to mitigate the economic impact of the COVID-19 crisis by providing critical financing and spur economic growth in hard-hit African countries.
French President Emmanuel Macron called on the world’s rich countries to reallocate $100 billion in SDRs to Africa by October.
“France is ready, France is willing to do so,” added Macron, in reference to France’s eagerness to do its part. He also underlined the importance of urging other wealthy countries, in particular the US, to follow suit. This proposal is part of what Macron described as France’s “New Deal with Africa”.
"I am confident this is going to materialize for the sake of Africa and for the sake of all of us because growth stability in Africa means prosperity and stability in Europe," said Kristalina Georgieva, Managing Director of the IMF, during a press conference.
On May 17, French Finance Minister Bruno Le Maire pledged to lend $1.5 billion to cash-stripped Sudan to clear its arrears to the IMF and foster broader economic reforms in the African country. This will pave the way for debt relief for Sudan – roughly $60 billion, twice its gross domestic product (GDP).
We have taken the first step in what we have agreed to call a New Deal with Africa. The context is exceptional: at stake is not only the end of the crisis, but also our ability to reinvent our growth model.pic.twitter.com/7rZN1yzorc— Emmanuel Macron (@EmmanuelMacron) May 18, 2021
To foster an inclusive recovery, the Sustainable Financing for Africa summit also launched a platform to increase vaccine production capacity in Africa through partnerships, transfer of technology, lifting intellectual property barriers, and boosting World Bank financing.
Together with the Managing Director of the IMF, Kristalina Georgieva, President Macron announced the ambition to increase the goal of vaccinating 20% of the population in low-income and low-to-middle-income by the end of the year up to 40%, through COVAX, and to produce an additional one billion doses of vaccines on the African continent by 2022.
“We must strive to vaccinate 40% of the population and it is doable if, together, we get the capacity to buy more doses and to produce [vaccines] with Africa," said President Macron during a press conference.
Along with other world leaders, France asked the World Health Organization, the World Trade Organization, and the Medicines Patent Pool to remove constraints related to intellectual property, which hold back vaccine production.
"Access to vaccines for the continent is a fundamental issue: this conference [...] is an important step towards making health a global public good," said Mihoub Mezouaghi, Director of the French Agency for Development in Morocco.
“There are still, however, a number of constraints that need to be addressed, such as providing greater access to patents, strengthening national health systems [...], and mobilizing public and private investment in the health sector," he told Global Citizen.
Falling short of expectations
As well as the impact of COVID-19 on people’s health — with Africa seeing just under 130,000 deaths from COVID as of May 18 figures — Africa has been hit particularly hard economically.
The continent could face a shortfall in the funds needed for future development of $290 billion up to 2023, according to an October 2020 report titled Regional Economic Outlook for Sub-Saharan Africa: Difficult Road to Recovery by the IMF.
COVID-19 is likely to cost Africa a significant amount of money because of reduced foreign financing flows from remittances, tourism, foreign direct investment, and international aid, among other factors. This has a direct impact on health systems, according to the analysis.
The IMF's SDRs allocation, therefore, falls short of African states' financing gap.
"When you compare the $33 billion in SDRs with Africa's real needs, it is a small drop in the ocean," said Daouda Sembene, a former IMF Executive Director and a Distinguished Non-Resident Fellow at the Center for Global Development in Washington D.C.
"More funding is needed to help African countries meet their needs stemming from the crisis," he told Global Citizen.
As the 189 IMF member states do not have the same decision-making power nor the same rights, their leverage is defined by quotas based on their position in the world economy.
In other words, G20 countries will get two-thirds of the IMF allocation — meaning that advanced economies will get nearly $400 billion in SDRs whereas African nations will only get $30 to $40 billion.
Using SDRs to stimulate developing countries’ recovery is a top priority for President Macron.
In February, along with other world leaders and heads of global institutions, the French president used an op-ed to urge the international community to use SDRs to reduce poor nations' debt burden.