Dakar and Nairobi—While the global spotlight remains firmly fixed on the battle against COVID-19 in wealthy countries, the life and death challenges faced by populations in developing nations, especially children, have steadily worsened over the past 12 months, largely in darkness and with only tokenistic support from global institutions.
COVID-19 has spared no country. But for people living in sub-Saharan Africa, the pandemic magnifies a long list of troubles. Start with economic growth. Before the pandemic struck, the economy was moving so slowly that it would have taken the average person around 45 years to double their income. Then, almost instantly, nearly 15 years of income progress disappeared. Even more troubling, sub-Saharan Africa will be the world’s slowest growing region in 2021: barely 1% on a per capita basis.
Poverty records are being shattered. Using the $1.90/day international definition, an estimated 50 million people have been pushed into extreme poverty in the region in the past year. This is the biggest change ever recorded.
The child of Nyagai Jany, born when she was 17, is growing up in a country that has to spend 11 times more on debt service than on education. Image Alissa Everett, UNICEF/EVERETT/SouthSudan
Add on lost learning – that’s around 350 million children who have not gone to school; growing levels of hunger and malnutrition – around half of the population is currently affected by food insecurity; the re-emergence of basic health threats – like cholera, malaria and measles; and rising protection risks – from teenage pregnancies and child marriage to sexual, physical and emotional abuse, and much of the continent is facing a human capital catastrophe.
COVID-19 is just one of many drivers. In addition to the economic and viral pains, most countries are also dealing with climate shocks, ranging from droughts and floods to cyclones and locust invasions, as well as intensifying insecurity.
These were among the many dark clouds hanging over the recent Spring Meetings of the International Monetary Fund (IMF) and World Bank, where finance ministers, central bankers, private sector executives and others debated ways to fix the COVID-19 mess. For citizens of the region, the outcomes were disappointing: global decision makers did not agree that their governments need meaningful assistance to protect people in this moment of extraordinary need.
Even when combining domestic stimulus and all forms of external assistance, the average person in region has benefited from around $40 in emergency support since the start of the crisis. Compare that to $2,400 for citizens of G20 countries.
Given the astronomical funding gaps and severe pressures on domestic revenue, it should be easy to forge global consensus for new support to the continent. Think again.
The numbers speak for themselves. Prior to COVID-19, 16 of the poorest governments in sub-Saharan Africa were spending more on servicing debt than on all social sectors combined. The difference was three-fold in places like Chad and The Gambia, and as high as 11-fold in South Sudan. And despite some help through the G20’s Debt Service Suspension Initiative (DSSI), around $2.5 billion continues to flow to creditors beyond Africa’s borders each month instead of into the futures of children.
We’ve now reached the point where every Shilling, Franc or Rand going to service debt is one less for healthcare, social protection, education and other essential services. UNICEF sounded this alarm bell just ahead of the Spring Meetings in a report entitled A Looming Debt Crisis.
Unlike the coronavirus, Africa’s debt crisis is not novel. Debt has, in fact, nearly doubled, on average over the past decade. But most of this was for investing in productive capacities and people. The problem is that repayment terms never accounted for a pandemic-induced global recession and an unthinkable collapse in public revenue.
Like most governments, African nations are looking for opportunities to increase spending, whether by reducing interest bills or accessing fresh funding. To put this in perspective, in the last 12 months, the United States has borrowed approximately $17,000 per citizen to finance stimulus and family support programs, with Australia, Canada, Germany, Japan and the United Kingdom closer to $10,000 per head. Sub-Saharan Africa is looking for much less, about $365 per person in new support to make ends meet over the next five years – or $73 annually.
To avoid a debt repayment/irreversible-loss-in-human-capital tradeoff requires an international debt restructuring architecture: one that creates the foundation for an inclusive and sustainable socioeconomic recovery for all Africans.
In line with fiscal responses elsewhere, governments in sub-Saharan Africa should be able to put social protection at the center of their crisis response and recovery plans. Cash transfers, in particular, can prevent or minimize nearly every risk that vulnerable households and children are facing right now; they can also generate powerful economic growth.
So, let’s link debt relief to funding for social protection. We call this “smart debt relief” for three reasons. First, it avoids an unacceptable situation whereby debt servicing contributes to a vicious cycle of lending. Second, it releases and channels finance to where investments are most needed: families and children. And third, it catalyzes more than a decade of momentum, as governments across sub-Saharan Africa have adopted policies, launched national cash transfer programs and made them part of their development plans.
Smart debt relief must start with extending the DSSI through 2023 (it currently expires in December) and providing some debt forgiveness to the neediest governments that guarantee new spending on social protection. It also requires that the G20 Common Framework be institutionalized to coordinate the rescheduling of debt held both by official bilateral andprivate sector creditors, again with greater flexibility for countries that demonstrate social protection commitments. Most importantly, smart debt relief must be complemented by additional support, including grant and highly concessional finance, so that sub-Saharan African countries have a realistic chance of closing funding gaps and protecting human capital.
The next time the world gets together to debate the future, whether it be the United Nations General Assembly (September), the IMF and World Bank Fall Meetings or the G20 Summit (both in October), let’s make sure that the spotlight shines brightly on Africa’s children and practical ways to get them the help they need. Smart debt relief should be viewed as a first step in a much larger support package for the continent, for its children, and its economic and development potential.
By Mohamed M. Malick Fall, UNICEF Regional Director for Eastern and Southern Africa and Peter Holmes à Court, Special Correspondent and Analyst
It is unlikely that in any twelve-month period, at any time in human history, the prospects of hundreds of millions of children have taken as dramatic a reversal as has just occurred for sub-Saharan Africa’s next generation.
The response to COVID-19, compounded by the ever-increasing impacts of climate change, renewed and expanded conflict, and the continent’s first simultaneous economic recession, have combined to hit children the hardest.
2020 began with the prospect of modest economic growth across Africa and quiet optimism, a combination of relative stability and a blossoming consensus on the actions needed to address the causes of climate change that are already impacting so much of the continent. When the African Development Bank (AfDB) released their Economic Outlook for 2020, it predicted growth of more than 3%. What happened next is well known: economies were thrown into a sharp recession, jobs evaporated, climate action stalled, and schools and other social services came to a standstill.
The debate on the efficacy of the pandemic responses will continue for years. Growing children, however, don’t have that luxury: the biology of brain growth and the opportunities for education are all windows that close quickly unless the right support is provided at the right time.
Never has there been a stronger case for immediately easing the debt burden on African nations, a case made in the release on Friday of African Development Bank’s Economic Outlook for 2021. The message was reinforced by Nobel Laureate Professor Joseph Stiglitz, whose authority on the subject begins with the fact that, with Rashid et al., he predicted the unsustainable debt levels across the Continent nearly a decade ago.
The fallout of the COVID-19-induced economic crisis is beyond what individual nations can sustain and requires the concerted action of the international community. Without rapid debt restructuring and relief, half-a-billion dollars flows every week from the continent to service lenders, money that is desperately needed by vulnerable households and children.
Through UNICEF’s work across sub-Saharan Africa, we are now getting a better pulse on just how bad the situation is.
An estimated 30 million Africans slipped into extreme poverty in 2020, with another 40 million at risk of the same in 2021 — the great majority of these being under 18 — while over 250 million students received essentially no schooling. Unlike most of their peers in other regions, remote learning tools remain largely inaccessible. Millions of students are unlikely to ever return to school, forced to become permanent fixtures of the informal labour market or victims of early marriage. Reports of spikes in teen pregnancies are deeply concerning.
Already entrenched climate emergencies, catalyzed by recurrent cycles of extreme weather, are generating new levels of displacement and food insecurity, while increasing stunting and the proliferation of diseases like cholera and malaria. Again, children bear the brunt: two-thirds of preventable illness and deaths from environmental hazards are experienced by them.
Most sub-Saharan African nations have only nascent social protection systems, small-scale versions of the safety nets that are taken for granted in wealthier countries. At a time when African families need these programs to be expanded, shrinking revenues and rising debt repayments jeopardize government budgets to deliver basic social services.
The G20 leaders committed “to do whatever it takes” to minimise the economic and social damage from the pandemic. Stieglitz prodded further: “We have the tools to do it, we only need the political will.”
Rich nations were able to avail massive public investments to ease the impact on families. These assistance packages — a form of cash transfers — are referred to as “relief” and “stimulus,” in recognition that an additional benefit of helping families is that the funds go immediately into restarting the economy.
African families deserve the same just as their economies need the stimulus. This will only be possible with additional financial support that begins with sensible debt restructuring of the type advocated by the African Development Bank and Professor Stiglitz on Friday.
Like anywhere in the world, families here need their children back in school, financial resources to help cover basic daily needs, and a fast and inclusive economic recovery.
Cash transfers have proven time and again to be the best-in-class method to offer both quick relief and build up resilience of individuals, households and national economies. One simple intervention yields diverse impacts: reducing the need for child labor, improving food security, increasing access to health and education services, building a family’s resilience to both weather the next shock and recover from the last one. Cash transfers are an investment in children, human capital and economic growth all at once.
Subjects like debt restructuring, the academic tones of Stiglitz, and comprehensive reports of institutions like the African Development Bank can sound like cold economics and dispassionate numbers. However, now we have the opportunity to put finance and economics to work for Africa’s children at a time when their needs are greatest. We have a tried and tested policy tool in cash transfers and the next twelve months to prove that we indeed “will do whatever it takes” to build back the future of Africa’s children.