The coming months will be challenging, but also present opportunity to implement reforms and interventions that contribute to long term and inclusive growth
Covid-19 has reversed the downward trend in global poverty for the first time in a generation. Global poverty is projected to push more than 100 million people into extreme poverty of which one-third are in sub-Saharan Africa where 40 per cent of the population already lives in extreme poverty.
Even if we witness an economic recovery globally this year, we cannot expect a dramatic reversal in poverty levels due to the long-term damage caused by Covid-19. The pandemic is expected to reduce global potential growth and require, going forward, fiscal adjustments to tackle the increasing debt levels in many eastern and southern African countries. The coming months present an opportunity to implement reforms and interventions that contribute to long term growth that is more inclusive.
Vaccination campaigns in the region must remain a priority if countries are to reach herd immunity (70 per cent of population vaccinated) that will make it is possible to relax social distancing and mobility restrictions and start reactivating their economies. The World Bank is a steadfast partner with these countries to support these efforts.
In Rwanda, we recently approved a $30 million operation (half are grants) to acquire and deploy Covid-19 vaccines for 1.3 million people. This is one of the three vaccine operations already approved (the other two are for Ethiopia and Eswatini) and are part of the 16 under preparation in the region.
Infrastructure and trade
Just as we have fast-tracked the Covid-19 response, we must fast-track the building blocks of sustainable infrastructure investment.
This means governments should work to attain robust legal frameworks, transparency, and regulatory certainty for infrastructure sectors.
These lynchpins will attract additional private investment in infrastructure, providing the fiscal stimulus and jobs countries need. In the Democratic Republic of Congo, we are working with the authorities using resources of a $500 million operation (half are grants) to expand and improve the existing infrastructure, as well as to create socio-economic opportunities for the population through the provision of temporary employment and skills training.
Another example of where countries rely on public infrastructure for economic recovery is the joint effort of the Horn of Africa that intends to upgrade roads in key trade corridors starting with the Isiolo-Mandera in Kenya.
It is being supported by a $750 million operation and in addition to building the new infrastructure and improving road security, the project is expected to contribute to an expansion of trade between the countries by increasing coordination, reducing trade costs and time, and developing regional value chains.
While significant efforts are deployed towards vaccination and economic recovery, the World Bank is also helping countries ensure that vulnerable populations are not left behind. In the coming months, support for education will be critical as children of poorer families are likely to have more challenges with distance learning and drop-out permanently from school, especially girls.
In Angola, a $250 million project aims to empower and educate girls, who are often excluded from the development process because of early pregnancies.
Deeper debt relief
In Sudan, a country that is restoring relationships with international financial institutions and navigating a delicate economic situation, we are providing $820 million in grants to deliver cash transfers and improve safety net systems to support families so the country can rebuild in an inclusive manner.
It is also worth mentioning three other initiatives supporting economic recovery:
Debt Service Suspension Initiative (DSSI), allows eligible countries to request a temporary suspension of debt service payments owed to bilateral official creditors. The Common Framework for Debt Treatments beyond DSSI focuses on countries in need of deeper debt relief (solvency issues) and facilitates debt restructuring on a case by case basis.
The 20th replenishment of the International Development Association — through which World Bank offers grants and concessional credits to low-income countries — is expected to increase the availability of financing over the coming years by more than $12 billion.
Covid-19 is a once-in-a-lifetime pandemic that has brought vast challenges and impacted us all, especially the poor and most vulnerable people. We have a significant opportunity to focus on building a resilient and inclusive recovery in Eastern and Southern Africa.
First published in The East African.