201.Witnesses said that the economies of many countries in Sub-Saharan Africa are fragile, have poor infrastructure, high levels of unemployment, low levels of trade within the continent, are dependent on commodities in their trade with the rest of the world , and many people are employed in the agricultural sector.
202.As set out in Chapter 1, the COVID-19 pandemic has caused a significant economic shock to the region. The impacts of COVID-19 are exacerbating many of the underlying issues discussed in this chapter; these specific problems are discussed at the end of the chapter.
203.Box 6 sets out the SDGs, which build on the eight Millennium Development Goals (2000–15). A report by the Sustainable Development Goals Center for Africa (SDGC/A), published in 2019, found that minimal progress has been made in achieving the goals—Belay Begashaw, Director General, SDGC/A, said that in some instances there was “complete stagnation”. The report found that all regions of Sub-Saharan Africa were unlikely to meet the SDGs, with the least likelihood in Central Africa across all goals. African countries were “relatively on track” to meet three goals by 2013: SDG 5 (gender equality); SDG 13 (climate action); and SDG 15 (life on land).
(1)End poverty in all its forms everywhere.
(2)End hunger, achieve food security and improved nutrition and promote sustainable agriculture.
(3)Ensure healthy lives and promote well-being for all at all ages.
(4)Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.
(5)Achieve gender equality and empower all women and girls.
(6)Ensure availability and sustainable management of water and sanitation for all.
(7)Ensure access to affordable, reliable, sustainable and modern energy for all.
(8)Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.
(9)Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation.
(10)Reduce inequality within and among countries.
(11)Make cities and human settlements inclusive, safe, resilient and sustainable.
(12)Ensure sustainable consumption and production patterns.
(13)Take urgent action to combat climate change and its impacts.
(14)Conserve and sustainably use the oceans, seas and marine resources for sustainable development.
(15)Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss.
(16)Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.
(17)Strengthen the means of implementation and revitalise the global partnership for sustainable development.
205.Jodie Thorpe, Dr Seife Ayele and Dr Lars Otto Naess, Institute for Development Studies, said that the dominant source of income in Sub-Saharan Africa is the informal sector, and most of those working in this sector are poorly paid.
206.The Africa Regional Office of the Open Societies Foundation (OSF) said that, following “many years of structural adjustment, deregulation and economic orthodoxy”, “countries such as Rwanda, Ethiopia, Kenya and Mauritius have been amongst the fastest growing economies”, but “their growth has been jobless and non-inclusive”.
207.Sub-Saharan Africa has the youngest population in the world, with at least 60% of its 1.1 billion people aged under 25. The ODI said that among this growing population was an increasing middle class, which was expected to account for over 40% of the population by 2030.
208.Three-quarters of young people in Sub-Saharan Africa are either unemployed or underemployed. The British Council said that Africa’s working-age population would grow by about 3% per annum between 2015 and 2035—approximately 450 million people. CDC Group said that 20 million new jobs would need to be created each year; many of the region’s economies did not have the scale to support such job creation. The British Council said that only 100 million could “hope to find decent work”. Three-quarters of new entrants to the labour market would be self-employed or work in microenterprises.
209.The OSF said that the “un(der)employed youth” of the region were “restless and hostile towards the state”. The link between lack of economic opportunity and violence is discussed in Chapter 6.
210.The FCO said the UK and the AU were “working together”(through the MoU discussed in Chapter 3) to address the “demographic transition”, with the aim of enabling “a dividend of prosperity and growth”.
211.Dr Okonjo-Iweala said that over 50% of African SMEs, micro-enterprises and markets were “owned and run by women”. Dr Rachel Bennett, Senior Lecturer in Human Geography, University of Gloucestershire, and Dr Philippa Waterhouse, Lecturer in Health and Social Care, Open University, said that women’s participation in the labour force was a vehicle for gender equality. However, the high average percentage of women in employment in Sub-Saharan Africa—61%—did “not always translate into empowerment”.
212.Ninety-two per cent of women working in Sub-Saharan Africa are part of the informal economy. Christian Aid said that “a great proportion of women” were “condemned as unpaid labour”. Dr Bennett and Dr Waterhouse said to change this there was a need for family leave, early childhood care and education, and support for caregiving by men in order to challenge gender norms.
213.Professor Gibril Faal OBE JP, Visiting Professor in Practice, London School of Economics, and Director, GK Partners, said that Africa had “a long history of regional migration” for employment. Dr Jones said that there was “cyclical” regional demand for labour. As a result, much of the migration within the continent was “extremely temporary … under two years, often much less than that”.
214.Professor Faal said that seasonal farmers “come and go”, while “others are there for generations”. He gave the example of Ivory Coast, which had “been hosting West African migrants for hundreds of years”.
215.Dr Jones said that environmental factors were major drivers of migration, in particular “depleted land, irregular rainfall, soil degradation, and the ensuing fall in agricultural yields.” The situation was made worse by “some state policies”, including “industrial development plans” that were “often extremely expensive in terms of water consumption and disruption to land”, such as Sudan’s “extremely aggressive plan of industrialisation built on dam construction”. However climate change had not yet produced the “truly terrifying levels of displacement … seen in other regions, notably South East Asia.”
216.Considering migration beyond the continent, Onyekachi Wambu, Executive Director, The African Foundation for Development (AFFORD), said Africa was likely to remain an exporter of labour. He thought this would result in African diaspora remaining “an important political, social, cultural and economic force”. The role of the diaspora is discussed in Chapter 5.
217.The AU’s Migration Policy Framework for Africa and Plan of Action (2018–2030) “takes into account AU priorities, policies, Agenda 2063, the Sustainable development Goals (SDGs) and international migration management policies and standards”. Dr Jones said there were also “regional structures for supporting migration and displacement” within with SADC, ECOWAS, and the EAC.
218.He said that the UK had an “excellent reputation” among many African states for its technical assistance on policy challenges, but it had “not used that advantage in supporting regional arrangements on mobility and migration”. It should support “regional inter-governmental mechanisms for the smooth regulation and enabling of” migration.
219.The FCO said the UK was “continuing our support to the AU to maximise the benefits of regular migration”. This work included “ethical recruitment, lowering the cost of remittance transfers, improved use of data and evidence in policy making, and encouraging mutual recognition of qualifications”. The UK had “seconded a technical adviser to the AU migration policy team”, to promote “better migration governance across the continent to facilitate safe, orderly and dignified migration”. It was exploring further work with the AU.
220.The population of Africa is projected to double to 2.1 billion by 2050. Providing employment is already a major challenge facing the countries of Sub-Saharan Africa: 20 million new jobs will be needed every year. The UK should support the UN and its agencies, in partnership with the AU, in their work to both harness the benefits and meet the challenges of population growth in the region.
221.Intra-Africa migration is a longstanding and continuing phenomenon, with over 21 million Africans living in another African country in 2019. We welcome the Government’s provision of technical support to the AU on migration through the 2019 UK-AU Memorandum of Understanding, including support for the implementation of the AU’s Migration Policy Framework for Africa.
222.More than 60% of people in Sub-Saharan Africa live in rural areas and are largely dependent on agriculture. Ms Thorpe, Dr Ayele and Dr Naess said agriculture was “the backbone of economies” in Sub-Saharan Africa, “the source of growth of their economies, jobs and livelihoods” and central to achieving the SDGs (see Box 7).
223.Agriculture accounts for 15% of Sub-Saharan Africa’s overall GDP, which they said was “indicative of the very limited transformation of many [Sub-Saharan African] economies to the manufacturing and services sectors.”
224.Ms Thorpe, Dr Ayele and Dr Naess said that crop production and livestock-keeping took place across the region, at “different intensities and scales, including smallholder family farmers and large commercial farmers”. Land productivity was roughly one fifth of that of East Asia, but had grown by approximately 50% since the early 1990s. Labour productivity was also low but had been rising. There was a low level of use of improved inputs (such as seeds) and farm implements or mechanisation: Sub-Saharan African farmers use 10 times fewer mechanised tools per farm hectare than in other developing regions.
225.The Natural Resources Institute, University of Greenwich, said that many farms were small and depended on rainfall. Small-scale farmers had low labour productivity and incomes. Many could not access loans, lacked up-to-date information on agricultural practices, were not well linked to markets and received low prices for their produce. Improving small farms was part of SDG 2.3, which aims to “Double the agricultural productivity and incomes of small-scale food producers”. There was a trend towards larger farms, and greater agricultural intensification and mechanisation.
226.The Natural Resources Institute, University of Greenwich, said that agricultural enterprise offered “one of the few pathways to dynamic and self-sustaining economic growth.” Agriculture provided “opportunities for trade” and the “exploitation of comparative advantage”, representing “the ‘low-hanging fruit’ of future economic development”. Agricultural commodities are the main exports of many countries in the region; for example, cocoa accounts for 20–25% of Ghana’s total foreign exchange earnings. Ms Thorpe, Dr Ayele and Dr Naess said there were “segments” of the sector—such as farms and agro-processing and services—which were creating “decent jobs”.
227.Some common “structural bottlenecks and barriers” across the agricultural sector were access to finance—credit, remittances, savings and insurance—transport costs, inadequate returns for investment, high risks and a lack of increased demand to create the impetus for greater productivity.
228.The Natural Resources Institute, University of Greenwich, said that investment was needed in rural infrastructure (roads and irrigation facilities) and agricultural research. Ms Thorpe, Dr Ayele and Dr Naess said that the “enabling conditions for investment” were “insufficient, or … only slowly developing”.
229.Ms Thorpe, Dr Ayele and Dr Naess and the Natural Resources Institute, University of Greenwich, said that investment did not just relate to economic development but to food and nutrition security, diet-related health issues, incomes, jobs and livelihoods and the environment.
230.Ms Thorpe, Dr Ayele and Dr Naess said climate change had a “severe” impact on agriculture. Much of the continent’s agriculture was rain-fed, and crops were “highly vulnerable to both drought and to excess rainfall, particularly in terms of seasonal changes that affect crop growth as well as post-harvest processing and storage.”
231.The Natural Resources Institute, University of Greenwich, said climate change had a significant negative impact on cereals production and cash crops such as coffee. The impact on other crops, such as root crops, livestock and the post-harvest sector was not yet known.
232.The impact would “be exacerbated by [the] pre-existing vulnerabilities” of the sector: “poverty, various forms of inequality, low access to information, land tenure insecurity, limited ability to influence policy, and other forms of environmental degradation”. Ms Thorpe, Dr Ayele and Dr Naess likewise said that the impact of climate change often acted “as a threat multiplier, compounding other drivers of poverty and food insecurity”. “Even modest changes in rainfall and temperature patterns” could “push marginalised people into poverty as they lack the means to recover from shocks.”
233.Agriculture remains the main source of jobs and growth potential in Sub-Saharan Africa. It is a sector highly vulnerable to the impact of the climate crisis, thus magnifying the impact of environmental change on the economies of the region.
234.Dr Moyo said that Africa needed “basic infrastructure and public goods. We still need healthcare and education.” Mr Wickstead said that transport infrastructure was an enormous challenge. This was linked to the objectives of increasing trade (discussed below).
235.In 2018, the African Development Bank estimated Africa’s infrastructure investment needs at $130 to $170 billion a year, with a financing gap in the range of $68 to $108 billion. The London Stock Exchange Group said that the size of infrastructure investment required “significantly exceeds the sums that domestic capital markets are currently able to provide”. Raising debt was “the most predictable source of financing”, via international capital markets, including through local currency bonds to minimise the risks to the issuer.
236.Dr Moyo said that there were still “1.5 billion people who have no access to cost-effective, reliable energy”, many in cities and towns. Dr te Velde too said that renewable energy—”hydropower, solar power, wind power”—had “promise” in the region. They could “now sometimes be generated at an equivalent cost, or even more cheaply, than some fossil fuel generation”. Africa had “the richest solar resources on the planet” but was responsible for “only 1%” of global solar energy production”.
237.There are opportunities and demand for infrastructure development across Sub-Saharan Africa, particularly for renewable energy infrastructure. Raising debt via international capital markets has become an increasingly important source of finance. The Government should continue to work with the London Stock Exchange Group in this area, particularly in support of local currency bond issuances.
238.The African Trade Policy Centre of UNECA said that industrial development was “central to Africa’s development agenda”. Industrialisation could “shift the continent’s over-reliance on the low value added commodities sector to higher productivity and value added activities”. It would drive productivity and the creation of decent jobs.
239.The African manufacturing sector grew between 1995 and 2017. Manufacturing value added (MVA) in absolute terms more than doubled from nearly $112 billion to $240 billion. However, the sector still plays “a limited role in the performance of Africa’s economies”. The contribution of MVA to Africa’s GDP from 1995 to 2016 was between nine and 12%.
240.The African Trade Policy Centre of UNECA said the development of manufacturing in Sub-Saharan Africa was impeded by tariff and non-tariff barriers, and the fragmentation of economies across the continent. These issues are discussed further below.
241.Witnesses set out the challenges of the business environment in the region, and said these had a negative impact on investment. These challenges include corruption (discussed below and see Box 7), poor or uneven regulatory frameworks, an uneven application of the rule of law, and security concerns and political uncertainty. Poor macroeconomic factors—such as high interest rates and unstable exchange rates made it “difficult, costly or risky for companies to borrow” and “affected investor sentiment”.
242.The Minister said that “growing the continent so that it has a tax base and functions in a more normal way” was important. Dr Okonjo-Iweala said that Nigeria, for example, had a diversified economy, “but unfortunately our revenue source is absolutely not … we have not found a good way to tax the other sectors of the economy, such as agriculture, creative industries and some aspects of manufacturing”. “A large percentage” of the Nigerian economy was “in the informal sector” and there was a question as to how to “formalise those things and tax them better”.
243.The OSF said that billions were lost annually to “petty bribes; the under-pricing of commodities and the over-pricing of goods and services publicly procured; tax evasion; and illicit financial flows”. Box 7 sets out the costs of corruption in the region.
Africa ranked lowest among global regions in Transparency International’s 2017 Corruption Perceptions Index, with an average score of 32 out of 100, significantly below the global average of 43. Six of the bottom 10 countries were in Africa.
Corruption affects every level of society. Half of Africans believed their country was becoming more corrupt and a quarter reported that in the last year they had been required to place a bribe in order to access public services.
Transparency International estimates that over $50 billion worth of stolen assets flow out of Africa every year.The UNDP calculated that “corruption is subtracting more than half of the resources that could finance education for the whole continent every year”.
244.Health Poverty Action said that, according to 2015 figures, $203 billion was extracted from Sub-Saharan Africa annually, mainly through corporations repatriating profits and illegally moving money out of the continent. The “unfair enaction of power by global north governments, institutions and companies … enables” tax evasion and tax avoidance, including the use of tax havens. Professor Murithi said African governments were often complicit.
245.The Minister said that “greater convergence of international rule sets to allow monies not to leave the continent illegally” was needed. There was “no point doing that unilaterally … if the money still flows out of the continent”. It was better to move “at a slower pace but within global standards”.
246.Dr Okonjo-Iweala said that the problem underlying corruption was “the lack of institutions”. It was necessary to build “financial management systems using technology and biometrics” and “strengthen” the independence of judicial systems.
247.The AU Convention on Preventing and Combating Corruption entered into force in 2006. The OSF said that its country reports showed “disappointment” among citizens of the States Parties to the Convention, with “national executives and legislatures” said to have undermined and curtailed the mandates of national anti-corruption agencies. There were some positive examples, however: Burkina Faso, Ghana, Mauritania, Namibia, Rwanda and South Africa had “ensured that national anti-corruption agencies” were independent, with adequate mandates, budgets and capacities. Governance issues are discussed further in Chapter 7.
248.Box 8 considers human rights in the extractive industries.
The Democratic Republic of the Congo (DRC) has some of the world’s largest untapped mineral deposits, including the world’s largest deposits of coltan and significant cobalt and lithium deposits.
Much of the mining in the DRC is undertaken by artisanal miners, who have been moved off mining sites, sometimes violently. The monetary return for the minerals they extract can be as little as £1.50 a day.Those working in the industry are vulnerable to systematic exploitation from powerful local figures and armed groups. Conditions in such mines are dangerous, with fatal accidents regularly reported. Human rights activists in the country have suffered intimidation and many have been forced to flee the country after receiving death threats.
In December 2019 a group of families launched landmark legal action against Apple, Google, Tesla, Microsoft and Dell, which it claimed were linked to mines in the country in which children had died or been injured.
The UK Government said it was “fully committed to seeing an end to … practices such as child labour” and “actively encourages all states to implement the United Nations Guiding Principles on Business and Human Rights”.The UK had been “a world leader in investment in responsible and sustainable business practices abroad”. For example, its “support for the Voluntary Principles of Security and Human Rights” in Madagascar and Angola had “helped to address communal tensions surrounding extractive industries”. There were “opportunities to further promote responsible mineral sourcing, such as cobalt mining in the DRC, oil extraction in Nigeria, or gold in South Sudan”.
The Minister said that the UK remained “committed to the urgency of addressing child, forced and bonded labour in cobalt supply chains”, and “regularly” raised “concerns about child labour” in the mining sector with the government of the DRC and in multilateral forums.
249.Corruption, tax avoidance and evasion, and illicit financial flows continue to deprive citizens and governments of Sub-Saharan Africa of much-needed funding for development. The UK should seek to ensure that UK businesses operate to the highest possible standards in the region. In particular, this should include compliance with the Bribery Act 2010, the Guiding Principles on Business and Human Rights (the Ruggie Principles) and the Extractive Industries Transparency Initiative global standard on oil, gas and mineral resources.
250.The Government should use its influence in Sub-Saharan Africa to pressure countries in which politicians and officials are themselves guilty of corruption to enact and implement reforms. The Government should make such reforms a central component of its relationship with the countries in question, in particular its aid and trade relationship.
251.While Africa has 15% of the world’s population, it accounted for only 2% of global inflows of FDI in 2015. Dr te Velde said that investment in Sub-Saharan Africa was “crucial for growth and job creation … so helpful in achieving the Sustainable Development Goals.”
252.Dr te Velde said there were examples of countries which had successfully attracted investment. For example, Ethiopia had taken a targeted approach and secured investment in its manufacturing industry.
253.The ODI proposed actions for the region’s governments to improve the business environment and attract capital, including eliminating regulations which discriminate against foreign firms, reducing investment requirements and improving energy and logistics infrastructure.
254.Mr Colin Buckley, General Counsel and Head of External Affairs, CDC Group, said that there had been a reduction in the availability of private capital for investment in Africa. Banks were “shutting up their retail operations”; around 10 global banks had “cut back their operations in Africa due to tighter regulations around risk and money laundering”. Private equity was “largely fleeing Africa”; it had “reached a peak in about 2014–15 and has been declining since”. While it was important not to “fall into the trap of describing Africa as a homogeneous whole”, “overall capital has reduced”.
255.CDC Group said that private investment was needed for sectors including infrastructure, SMEs, food and agriculture, manufacturing, construction and real estate, health and education. The “gap in investment” for the region’s small and medium-sized enterprises was about $330 billion. Investment was needed to “transform those small businesses into larger ones that are engines of job growth”.
256.One challenge of attracting investment into the region was the size of the economies. Mr Buckley said that “Kenya’s GDP is approximately the size of Glasgow’s; Ghana’s is approximately the size of Liverpool’s; and Ethiopia’s is approximately … the size of that of Leeds”. A “regional approach”—such as the planned AfCFTA (discussed below), which would allow businesses “more easily” to “expand their markets beyond their national borders”—would “be welcomed by us as a financial institution”.
257.Peter Maila, Investment Director, Africa Coverage Team, CDC Group, said that a second challenge was the small size of most companies in the region: many were “micro-SMEs”. Mr Buckley said that the UK had more than 15,000 businesses with revenue of over £50 million a year; in Ethiopia there were around 15.
258.Multilateral institutions support countries to raise money through financial markets. The London Stock Exchange Group said that the African Development Bank and the World Bank’s International Bank for Reconstruction and Development had been working to develop local currency bonds, and offshore Nigerian and Rwandan local currency bond markets.
259.Lord Boateng said that Africa accounted for less than 3% of global trade. Africa faces particular trade challenges: the extractives industry dominates exports (particularly fossil fuels such as coal and oil) at 70% of earnings and its infrastructure leads out of the continent, not across it.
260.Tom Pengelly, Director, External Secretariat for All-Party Parliamentary Group on Trade out of Poverty, and Managing Director, Saana Consulting, said the region had “lots of small countries and small markets” (discussed above), with “ thick borders between them”. It was “not easy to ship trade across” them, “even if they are neighbouring.” Intra-African trade accounts for just 15% of continental trade.
261.The majority of intra-African trade is between members of a REC (see Chapter 3). The African Trade Policy Centre of UNECA said that there was “overlap and duplication of [existing] trading arrangements”, which complicated customs procedures, “allows forum shopping, frustrates the creation or functioning of customs unions and complicates the advancement of deeper continental economic integration”.
262.The AfCFTA (summarised in Box 9) seeks to address these problems.
The African Continental Free Trade Area (AfCFTA) will be the world’s largest free trade area since the formation of the World Trade Organisation, covering a market of 1.2 billion people and a GDP of $2.5 trillion.
The AfCFTA agreement has been signed by 54 of the 55 members states (all but Eritrea). It came into effect on 30 May 2019 (30 days after the 22nd signatory ratified the agreement); 28 signatories have ratified the agreement. The operational phase of the agreement began in July 2019.
The agreement aims to:
It will remove 97% of tariff lines on goods imported from other African countries, over a period of 5–15 years.It will be implemented in phases, commencing with tariffs, then services, investment and competition.
Implementation was scheduled to begin with tariff cuts in July 2020, but has been put on hold due to the COVID-19 pandemic.
263.Mr Pengelly said that, if all the planned tariff cuts were implemented, there could be an increase in intra-African trade of up to 50%. If trade facilitation measures—such as reducing red tape and improving transport systems and customs points—were also implemented, this could result in “about three times the benefits”.
264.The African Trade Policy Centre of UNECA said it would be “a game changer … upgrading manufacturing and spurring industrialization”. It was “expected to support the processing of raw materials and development of African regional value chains”, because it would “boost incentives to source inputs and intermediates from within the continent.” It would aid diversification: less than 40% of exports within the continent are in extractives (compared with 70% of exports to outside the continent). The economic benefits of the AfCFTA, based on UNECA modelling, are in Box 10.
265.The African Trade Policy Centre of UNECA said that the AfCFTA would support export-driven growth. Modelling showed that “industry dominates the gains in intra-African trade, and this is particularly pronounced for African Least Developed Countries”. However, the AfCTFA was “not … a panacea to Africa’s development challenges”. Adjustments would be needed, alongside arrangements for Less Developed Countries in the region, “to offset any short-term shocks”.
266.It acknowledged that implementation would be challenging. Mr Wickstead and Dr Moyo said delivering the AFCFTA depended on political will. Mr Wickstead was “pretty confident” that it would be achieved; Mr Pengelly said there was “strong heads-of-state buy-in”.
267.Mr Pengelly said there was a valuable role for the AU in implementing the AfCFTA, as a pan-African initiative. Dr Moyo said the vital countries for the success of the AfCFTA were Kenya, South Africa and Nigeria.
268.The RECs were “expected to play a key role in coordinating implementation of the AfCFTA”, developing “complementary measures at the regional level”, and offering advice. The AfCFTA agreement provided for “the resolution of incompatibilities or inconsistencies between the AfCFTA and other intra-African trade instruments”.
270.The economic impacts of COVID-19 are set out in Chapter 1.
271.The African Trade Policy Centre of UNECA said that the projected fall in GDP across the region meant that “complementary large-scale stimulus and cooperative partnership measures” would be “crucial”.
272.Dr Okonjo-Iweala said that African Finance Ministers had “estimated the immediate need to be $100 billion, possibly $200 billion if it lasts longer”. The “fiscal space” was “very constrained”. African nations were “able to implement a fiscal stimulus of only 0.8% of GDP, compared with rich countries” which had “provided 8% to 10%”. Christian Aid was concerned that most Sub-Saharan countries already bore “a high debt burden due to external loan servicing”, which would be “exacerbated by the current COVID-19 crisis”.
273.Dr Okonjo-Iweala said help from international partners was needed, “to provide the additional resources”. These resources included “supplies” and work to “strengthen health systems”—the AU had “estimated an immediate need for $350 million to help the African CDC and … national centres for disease control”—and “help with the economic impact”. To date, “partners have acted responsibly through the World Bank, the IMF and the African Development Bank” (see Box 11) and “some resources” had been provided, but they were “not enough”.
On 15 April the virtual meeting of G20 finance ministers and central bank governors, hosted by Saudi Arabia, agreed to “support a time-bound suspension of debt service payments for the poorest countries that request forbearance.” The countries “agreed on a coordinated approach with a common term sheet providing the key features for this debt service suspension initiative, which is also agreed by the Paris Club. All bilateral official creditors will participate in this initiative, consistent with their national laws and internal procedures.”
The G20 countries “call on private creditors, working through the Institute of International Finance, to participate in the initiative on comparable terms.”
They asked “multilateral development banks to further explore the options for the suspension of debt service payments over the suspension period, while maintaining their current rating and low cost of funding. We call on creditors to continue to closely coordinate in the implementation phase of this initiative.”
The World Bank and the International Monetary Fund
On 17 April 2020 the World Bank Group and the International Monetary Fund convened African leaders, bilateral partners and multilateral institutions to spur faster action on the response to COVID-19 in African countries.
This followed calls from the President of the World Bank Group and the Managing Director of the International Monetary Fund for creditors to suspend debt repayments to provide support to the poorest countries.
The statement said that official creditors had mobilised “up to $57 billion for Africa in 2020 alone … to provide front-line health services, support the poor and vulnerable, and keep economies afloat in the face of the worst global economic downturn since the 1930s.” Support from private creditors “could amount to an estimated $13 billion”. It said that Africa needed “an estimated $114 billion in 2020 in its fight against COVID-19, leaving a financing gap of around $44 billion.”
Uptake of the G20 agreement
Around half of the 77 eligible countries have expressed interest in the G20 scheme, and are expected to defer approximately $12bn of payments this year. There have been no reports of private sector involvement in the G20 scheme.Eligible debtor countries have been cautious about the G20 scheme because it contains a clause which blocks countries requesting relief from “contracting new non-concessional debt during the suspension period, other than agreements under this initiative”. For example, Kenya has rejected the proposal, reportedly because this might result in a downgrade of Kenya’s credit rating.
In June 2020, the Institute of International Finance reported that some developing countries were using the global financial markets to finance their coronavirus-driven deficits. Following issuances by investment-grade countries, the Financial Times reported that from the start of June, the market was opening for what it described as “speculative-grade sovereign and corporate issuers” from sub-Saharan Africa and Latin America.
274.Dr Okonjo-Iweala suggested some actions that the UK Government could take. First, “additional resources directly from the UK”. This could include funding for the Africa Centres for Diseases Control and Prevention and “any supplies that could go to us”. In the short term, there was an issue of how “to feed those who cannot work”, especially as most Africans are employed in the informal sector, with a particularly significant impact on women.
275.Second, the UK could “support the World Bank to get more … supplemental emergency IDA, that it can pass on to African countries”, and “urge the International Monetary Fund to get rich countries”, including the UK, “to pool … the special drawing rights in the reserves of rich countries that they are not using”. The UK could “pull $100 billion and lend it to the central banks”. Such liquidity support could help African states to support small and medium-sized enterprises.
276.Third, the UK could “support a two-year standstill in debt service for African countries”. A two-year standstill would “immediately release … between $30 billion and $44 billion”.
277.She said that the AU was “asking for a two-year standstill across the board for both bilateral debt and private debt”. The World Bank and the IMF had said they could not “entertain debt relief or a standstill because of their credit ratings”, but would “give lots of new money”.
278.The AU thought two years was necessary for bilateral debt “because of the longer-term impacts and the resources” that would be released, and to give time to assess the nature of different countries’ debts. It was necessary to “look at it country by country to see what debt sustainability will look like”.
279.Christian Aid thought the Government should “help broker a debt relief deal for the poorest countries”. Dr Okonjo-Iweala said that the two year standstill, if agreed, would be used to assess which countries needed debt relief, and this could then be considered.
280.Lord Boateng identified coordinating “a global response to the looming debt crisis on the continent” as an opportunity for UK leadership. Dr Okonjo-Iweala said that the UK could help by raising the AU’s two-year standstill proposal with China and other bilateral creditors. China had already—as a member of the G20—agreed to a standstill until the end of 2020. As “the largest bilateral creditor on the continent, with debt service of slightly more than $8 billion”, its participation was “paramount”.
281.The UK could also assist on private sector debt. Some private creditors and bondholders were using “scare tactics”, stating that if African countries asked for a debt standstill they would be considered in default. This was “a very short-term approach, because if we do not do something in an orderly fashion now, there may be disorderly behaviour later by countries that cannot pay”.
282.Fourth, the UK could offer “technical assistance and advice” to African central banks “.
283.Fifth, there were three countries facing specific problems. Sudan and Zimbabwe were under sanctions, and a way needed to be found to “put sanctions issues aside for health reasons, and mobilise resources” for them. Eritrea owed “about $100 million in arrears to the World Bank”, and so was “not getting help”: “a fund to help Eritrea would be welcome”.
284.Sixth, if and when a vaccine was developed, it would be necessary to “make sure that we have volume and quantity for everyone and that poor countries are not locked out”. The UK could “play a very important role in being active in the international group to make sure that that happens”. On 4 June 2020 the UK convened Gavi—the Vaccine Alliance’s third donor pledging conference.
285.The COVID-19 pandemic has already had a negative and disproportionate impact on economies in Africa. Export markets have dried up, remittances have fallen, currencies have depreciated and the continent has experienced capital flight. Significant economic support from international partners will be needed to prevent the continent’s economic gains over the last two decades being reversed.
286.The contraction of the global economy due to COVID-19 will have a negative impact on UK trade with and investment in Sub-Saharan Africa and on UK aid, given that the UK’s 0.7% development assistance target is tied to Gross National Income.
287.The Government should continue to encourage other countries to maintain their official development assistance (ODA) commitments to Sub-Saharan Africa to avoid exacerbating the impact of the crisis.
288.The Government should support the AU’s call for a two-year standstill for African countries’ public and private debt, and engage with major creditors to the continent in support of this objective.
289.Some countries are likely to need debt relief, in addition to the two-year debt standstill sought by the AU. The Government should work with the AU, the IMF and the World Bank to understand which countries need debt relief, and seek to play a constructive role in their international efforts to secure this.
292.Access to a vaccine for COVID-19, should one be successfully developed, must be available on the basis of need. The Government should continue to work with international partners—including through Gavi, the Vaccines Alliance and the Coalition for Epidemic Preparedness—to ensure any such vaccine is made available to developing countries, including those in Sub-Saharan Africa.
307 The Millennium Development Goals sought: to eradicate extreme poverty and hunger; achieve universal primary education; promote gender equality and empower women; reduce child mortality; improve maternal health; combat HIV/AIDS, malaria and other diseases; ensure environmental sustainability; and develop a global partnership for development. UN, ‘Sustainable Development Goals kick off with start of new year’: [accessed 24 June 2020]
308 Based on the SDGs for which it had sufficient data, namely: poverty, malnutrition, maternal mortality, net school enrolment, access to electricity, and access to drinking water).
309 Belay Begashaw, ‘Africa and the Sustainable Development Goals: A long way to go’, Brookings Institution : [accessed 24 June 2020]
310 Written evidence from Jodie Thorpe, Dr Seife Ayele and Dr Lars Otto Naess ()
311 Written evidence from the Royal African Society () and written evidence from the Africa Regional Office of the Open Society Foundations (OSF) ()
312 Written evidence from Jodie Thorpe, Dr Seife Ayele and Dr Lars Otto Naess ()
313 Written evidence from the Overseas Development Institute (ODI) ()
314 Written evidence from Jodie Thorpe, Dr Seife Ayele and Dr Lars Otto Naess ()
315 Written evidence from the British Council ()
316 Written evidence from CDC Group ()
317 Written evidence from the British Council ()
318 Written evidence from the Royal African Society () and written evidence from the OSF ()
319 Written evidence from the FCO ()
321 Written evidence from Dr Rachel Bennett and Dr Philippa Waterhouse ()
322 Written evidence from Dr Rachel Bennett and Dr Philippa Waterhouse ()
323 Written evidence from Christian Aid ()
324 Written evidence from Dr Rachel Bennett and Dr Philippa Waterhouse ()
326 Written evidence from Dr Will Jones ()
328 Written evidence from Dr Will Jones ()
329 Written evidence from Onyekachi Wambu ()
330 AU Commission, Migration Policy Framework for Africa and Plan of Action (2018–2030) (May 2019) p 4: [accessed 24 June 2020]
331 Written evidence from Dr Will Jones ()
332 Written evidence from Dr Will Jones ()
333 Written evidence from the FCO ()
334 Written evidence from Jodie Thorpe, Dr Seife Ayele and Dr Lars Otto Naess ()
335 In some countries the share was significantly higher. For example, agriculture accounted for 35% of Ethiopia’s GDP, and 30% of Ghana’s GDP.
336 Written evidence from Jodie Thorpe, Dr Seife Ayele and Dr Lars Otto Naess ()
337 Written evidence from Jodie Thorpe, Dr Seife Ayele and Dr Lars Otto Naess ()
338 Written evidence from the Natural Resources Institute, University of Greenwich ()
339 Written evidence from the Natural Resources Institute, University of Greenwich ()
340 Written evidence from Jodie Thorpe, Dr Seife Ayele and Dr Lars Otto Naess ()
341 Written evidence from Jodie Thorpe, Dr Seife Ayele and Dr Lars Otto Naess ()
342 Written evidence from the Natural Resources Institute, University of Greenwich ()
343 Written evidence from Jodie Thorpe, Dr Seife Ayele and Dr Lars Otto Naess ()
344 Written evidence from Jodie Thorpe, Dr Seife Ayele and Dr Lars Otto Naess () and written evidence from the Natural Resources Institute, University of Greenwich ()
345 Written evidence from Jodie Thorpe, Dr Seife Ayele and Dr Lars Otto Naess ()
346 Written evidence from the Natural Resources Institute, University of Greenwich ()
347 Written evidence from the Natural Resources Institute, University of Greenwich ()
348 Written evidence from Jodie Thorpe, Dr Seife Ayele and Dr Lars Otto Naess ()
351 Written evidence from the London Stock Exchange Group ()
354 Written evidence from Dr Terence McSweeney ()
355 Written evidence from The African Trade Policy Centre of UNECA ()
356 Written evidence from The African Trade Policy Centre of UNECA ()
357 Constant 2010 US dollars
358 Written evidence from the African Trade Policy Centre of UNECA ()
359 Written evidence from the African Trade Policy Centre of UNECA ()
360 Written evidence from ODI (), written evidence from the Royal African Society (), written evidence from the OSF () and written evidence from CDC Group ()
361 Written evidence from ODI () and CDC Group ()
362 Written evidence from CDC Group ()
363 (Colin Buckley)
364 Written evidence from the CDC Group ()
367 Written evidence from the OSF ()
368 Transparency International, ‘Corruption Perceptions Index 2017’: [accessed 24 June 2020]
369 Ibid. World Economic Forum, ‘1 in 4 Africans had to pay a bribe to access public services last year’: [accessed 24 June 2020]
370 Transparency International, ‘How to win the fight against corruption in Africa’: [accessed 24 June 2020]
371 Valentina Bianchini, ‘How much do we have to pay?’, United Nations Development Programme: [accessed 24 June 2020]
372 Written evidence from Health Poverty Action ()
376 AU, ‘African Union Convention on Preventing and Combating Corruption’: [accessed 24 June 2020]
377 Written evidence from the Royal African Society () and written evidence from the OSF ()
378 News About Congo, ‘Congo with $24 Trillion in Mineral Wealth but still poor’ (15 March 2009): [accessed 24 June 2020]
379 Annie Kelly, ‘Apple and Google names in US lawsuit over Congolese child cobalt mining deaths’ The Guardian (16 December 2019): [accessed 24 June 2020]
380 Amnesty International, ‘Profits and loss: Mining and human rights in Katanga, Democratic Republic of the Congo’: [accessed 24 June 2020]
381 Annie Kelly, Human rights activist ‘forced to flee DRC’ over child cobalt mining lawsuit’, The Guardian (10 March 2020):
383 HL Deb, 25 February 2020,
384 Written evidence from Search for Common Ground (
385 Written evidence from James Duddridge MP ()
386 Written evidence from the CDC Group ()
389 Written evidence from the ODI ()
396 Written evidence from CDC Group (
402 Written evidence London Stock Exchange Group ()
403 Written evidence from Lord Boateng ()
404 Written evidence from the African Trade Policy Centre of UNECA ()
407 (Tom Pengelly)
408 Written evidence from the African Trade Policy Centre of UNECA (). On average, 55% of REC exports to Africa are within the same REC, and about 50% of REC imports from African countries originate from within the same REC.
409 United Nations Conference on Trade and Development, African Continental Free Trade Area: Policy and negotiation options for trade in goods: [accessed 24 June 2020]
410 Written evidence from The African Trade Policy Centre of UNECA ()
413 Written from The African Trade Policy Centre of UNECA ()
414 Written evidence from the African Trade Policy Centre of UNECA (). Average figures 2014–16. Also see written evidence from Dr Stephen Hurt ().
415 Written evidence from The African Trade Policy Centre of UNECA ()
416 Written evidence from The African Trade Policy Centre of UNECA ()
421 . She said that any “failure from them”, be it “a default, recession, downgrading of their credit rating or any of these things” would be “really harmful and has material, second-order, knock-on effects for the rest of the region”.
422 Written evidence from The African Trade Policy Centre of UNECA (). AfCFTA is to prevail, but “RECs that have achieved ‘among themselves higher levels of regional integration’ are to persist as islets of such higher integration”.
423 Written evidence from the African Trade Policy Centre of UNECA ()
424 . The London Stock Exchange Group said that on 3 April 2020 the African Development Bank admitted its $3 billion ‘Fight COVID-19’ social sustainable bond to the London Stock Exchange. Proceeds will be used to alleviate the economic and social impact of the COVID-19 pandemic across the continent. It is the largest social sustainable bond to be admitted to London’s Sustainable Bond Market. Written evidence from the London Stock Exchange Group ()
425 Written evidence from Christian Aid ()
430 G20 Information Centre, ‘Communiqué on the Virtual meeting of the G20 finance ministers and central bank governors Riyadh, Saudi Arabia’ (April 15 2020): [accessed 24 June 2020]
433 International Monetary Fund ‘World Bank Group and IMF mobilize partners in the fight against COVID-19 in Africa’ (17 April 2020): [accessed 24 June 2020]
436 Jonathan Wheatley, ‘Developing economies borrow more despite debt relief initiative, The Financial Times (14 June 2020): [accessed 24 June 2020]
437 ‘China and the West must not use African debt as a tool for influence—experts’, South China Morning Post (10 May 2020): [accessed 24 June 2020]
438 Jonathan Wheatley, , The Financial Times
442 . The International Development Association (IDA), part of the World Bank, is the single largest source of concessional finance for the poorest countries in the world.
443 A proposal to create additional SDRs was blocked by the US in April, because only 3% would have been available to the poorest countries. The IMF is now considering how to give access to existing SDRs for poorer countries. Eric Martin and Enda Curran, ‘IMF chief calls on private creditors to join G20 debt relief for poorest states’, Business Day (9 June 2020): [accessed 24 June 2020]
449 Written evidence from Christian Aid ()
451 Written evidence from Lord Boateng ()
452 . According to an OECD report published on 27 May 2020, “implementation of the [G20]standstill from China remains uncertain” because “its implementation might be subject to different interpretations”. It might, for example, “distinguish between loans extended by development banks … and official government loans”, which “would exclude at least two thirds of the debt stock from the standstill”. There are also “uncertainties on the magnitude of Chinese lending”. OECD, ‘A “debt standstill” for the poorest countries: How much is at stake?’ (27 May 2020): [accessed 24 June 2020]. On 8 June 2020, Ma Zhaoxu, China’s Vice Foreign Minister, reconfirmed that China would suspend debt repayments for 77 low-income countries as agreed by the G20, but did not provide details of the beneficiaries, amounts or the terms of this standstill. Lu Xu, ‘China, World’s Biggest Creditor, Delays Debt Repayments for 77 Nations’, Voice of America (10 June 2020): [accessed 24 June 2020]
457 Gavi, ‘World leaders make historic commitments to provide equal access to vaccines for all’ (4 June 2020): [accessed 24 June 2020]