How would you describe Africa’s post-Covid-19 recovery, and what’s the economic outlook for Africa in 2022?
Christian Yoka: The Covid crisis has been exceptional in its scale and in its having brought Africa’s 20 years of growth to a halt. The continent had in fact been enjoying the highest growth rate in the world. But the economy in Africa as a whole started growing again in 2021, and real GDP has surpassed its pre-crisis growth rate. It’s now at 3.6% compared to 3.2% in 2019. The recovery is thus quite robust, especially thanks to the improving economic conditions internationally. The healthy economic situation in China a big factor here, as several African countries are benefiting from its strong demand for raw materials such as oil and precious metals.
What’s more, about 30 countries have enjoyed continued support from international donors, allowing for some fiscal room for maneuver. This is an encouraging but mixed outcome: although the recovery is real, it’s half as strong as in other countries.
Even if Africa has recovered significantly after the crisis?
C.Y.: Quite so, because while worldwide growth ranges from 5% to 7.5%, in Africa it’s 2.5% to 3%. So, we need to keep a close eye on the situation. This is also why the IMF has revised growth outlooks for 2022 downwards. It’s a worrying development because the health crisis has led to an increase in the number of people who have fallen into poverty, reportedly over 33 million people throughout Africa. If this outlook of smaller recovery were to continue, it could have harmful effects on people still living in extreme poverty. There is a great deal of uncertainty in the economic outlook.
And there are considerable divergences among African economies.
C.Y.: It’s true that we sometimes generalize when we talk about Africa; we approach it as if it were a single country. But the continent is very mixed—like Europe, where you have countries as different as Germany and Bulgaria. For example, in South Africa or the Maghreb, the standard of living is three times higher on average than in West Africa.
Disparities can also be linked to specialization of economies. Central and Southern Africa are very dependent on extractive raw materials. In East and North Africa, economies are much more diversified and less dependent on natural resources. It’s interesting to note that five of the ten countries that make up 40% of Africa’s overall economy (South Africa, Angola, Nigeria, Ghana, and Algeria) derive nearly 80% of their wealth from exports linked to extractive raw materials.
Other countries, such as Tanzania and Mauritius, rely especially on tourism for their income. So, we have two categories of countries, one that’s extremely vulnerable to variations in commodity prices and the other very dependent on measures enacted because of the Covid crisis. In Africa, it’s the most diversified economies that have weathered the crisis best: their growth model should encourage maximum diversification of economies.
The book "L’Économie africaine 2022" states that “for about 10 years, nearly all African countries have shown signs of economic progress, with growth rates of 5% to 9%, but with little effect on reducing poverty, which [...] affects mostly young people and women.” How can this be explained, and what can be done to correct it?
C.Y.: Let’s recall first that this phenomenon is not unique to Africa: we can see similar disparities in Europe, for example, in unemployment, economic insecurity, access to housing, and other areas. While the pandemic has led to significant growth in extreme poverty, poverty levels have actually been decreasing over the past 20 years.
We may not realize it, but the Human Development Index (HDI) has increased practically everywhere, even in the Sahel. But, as I’ve mentioned, the pandemic has curbed this progression. Another point to keep in mind is that demographic growth absorbs much of the wealth produced. In Niger, for example, economic growth rate is about 2%, but the natural population growth rate is 3.9%.
Are there ways we can reduce this poverty?
C.Y.: We need public policies that are much more inclusive, and we must see to it that the most vulnerable people and geographic areas are included in our projects. Keep in mind that many African countries have economies dominated by agriculture and populations that are predominantly rural. It’s crucial to ensure that policies work towards balanced territorial development, so that policies can also touch the people living in the most remote places. It’s also important to develop social safety net policies to reach those people, especially youth and women.
Special Drawing Rights (SDRs) seem to be a key topic of discussion between the European Union and the African Union since the summit on the financing of African economies.
C.Y.: We should welcome the decision made to respond to the crisis by increasing the Social Drawing Rights for IMF member countries. The SDRs represent $650 billion, a significant amount. This is one of the responses made to strengthen the reserves of member countries. A lot of headway has been made in the discussions, and it’s no accident that it coincides with the arrival of the Biden administration. In August 2021, it was decided that the United States would receive $113 billion, China $41 billion, and France $27 billion. But the African countries as a whole received $33 billion, an amount that, while helpful, is too little.
This is why France has pleaded for a larger share of this IMF allocation to benefit African countries. Our country is willing to give part of its allocation and is advocating that other rich countries do the same, as they need it less than do poor countries. A proposal to this effect was made at the G7 summit in June 2021, and it was decided to reallocate $100 billion in these SDRs to African countries. That’s very good news, but the question now, is how to channel those reallocations.
In other words, should they go directly to the central governments of the African countries, or via their development banks? In short, the technical questions are up for discussion. It’s not so much a question of using these SDRs to strengthen foreign exchange reserves (even if this increases import capacity), but above all to maintain investment capacity.