Jump to navigation

Recovery will need better trade terms and debt relief deals

The UN's latest report strikes a more positive note if commodity prices hold up and there is more flexibility on debt

This year's rebound in commodity prices and the fact that Africa's public health systems have experienced far less pressure from the pandemic than initially feared are two glimmers of light for the region's economy according to the report from United Nations Conference on Trade and Development published on 18 March.

However, 'commodity dependence, heavy reliance on capital inflows, and low rates of capital formation continue to make for a fragile growth trajectory', it says.

Data in the UNCTAD research shows Africa's two leading economies – Nigeria and South Africa, which make up all most half the continent's total GDP – will have to wait until 2022 at the earliest to return to pre-pandemic levels. This will have critical regional implications, including on the pace at which the just launched African Continental Free Trade Area (AfCFTA) can develop.

South Africa's economy is expected to grow by 3% in 2021 which will still leave output at the same level as 2015. Its already struggling construction industry bore the brunt of the slowdown with a 20% drop.

Nigeria's output, meanwhile, is expected to grow by 1.5%, against its 1.9% contraction last year. That means heavy losses on a per capita basis for most of the country's 210 million people.

The unresolved matter of the growing debt service burden will prove critical this year, UNCTAD says. The report warns that 'large debt overhangs' pose a 'very serious constraint on sustained recovery, in the absence of appropriate multilateral support.'

Analysts expect the United States to back a $500 billion issuance of International Monetary Fund Special Drawing Rights at the upcoming Group of 20 meeting but UNCTAD believes that this, combined with the G-20's Debt Service Suspension Initiative (DSSI), won't be enough to avoid Angola and Congo-Brazzaville joining Zambia in having government-debt-to-GDP over 100% and facing debt distress by the end of the year. 



Related Articles

Competition for clusters

The African Union will determine which African countries will host India’s two new industrial clusters, which will be backed by billions of dollars in investment from the New Delhi...


Washington, Beijing or African consensus?

Those African regimes seeking to emulate the Chinese model should remember that real development starts at home, argues Senegalese writer Adama Gaye

Sports and politics rhymed perfectly as the organisation of the Beijing Olympics confirmed China's global rise. And the impressive harvest of medals won by China's athletes lends...


Tunisia pushes for peace

A third attempt to get the UN Security Council to declare the coronavirus pandemic a 'threat to humanity and international peace and security' and coordinate the necessary emergenc...


Newish but not radical

The EU wants a groundbreaking economic and security accord with Africa – but its efforts to renegotiate a trade deal have stalled

An internal draft of the European Commission's 'Comprehensive Strategy with Africa', seen by Africa Confidential, is strong on rhetoric about a new era of partnership but lacks bot...