A report released at the Bloomberg New Economy Forum in Singapore has revealed that the COVID-19 pandemic has pushed about 30 million people in sub-Saharan Africa into extreme poverty. This has wiped out more than five years of constant progress.
The Bloomberg Economics Special Report titled Long Covid: Jobs, Prices and Growth in the Enduring Pandemic addresses the challenges that COVID-19 poses for growth, inflation and development globally.
In the early 2000s, the International Monetary Fund and World Bank’s Heavily Indebted Poor Country Initiative led to significant reduction in debt levels, freeing up domestic resources and improving donor relations. There was also increased trade and buoyant commodity prices also played a role, with GDP per capita in resource-rich countries growing twice as fast.
From 2016 however, growth has stalled. The slowdown started a year after the adoption of the UN Sustainable Development Goals, the universal call to eradicate poverty by 2030 through progress on 17 integrated goals. These goals range from health, education, inequality and climate change.
Economists have forecast that lost ground will not be recovered until 2024, when the per capita output is expected to return to pre-pandemic levels. Slow and unequal vaccine rollout means many countries will continue to deal with virus outbreaks that delay the safe reopening of their economies.
To make notable progress on poverty eradication, Africa requires immense support from the international community given the region’s limited resources. To address this gap, funding from official creditors including the IMF, the largest providers of external debt, remain crucial for sub-Saharan Africa. Over the past 20 years, China has become one of the largest creditors on the continent and has seen its share of debt owed rise from about 40% in 2010 to more than 63% at the end of 2019.
Beijing is now looking to deepen its ties with the region through the Belt and Road Initiative, a plan to advance development priorities by investing in infrastructure projects around the world.
If all goes according to plan, increased engagement with China will build needed infrastructure and open new routes to trade, helping deliver on Africa’s poverty reduction goals.