In the newest Regional Economic Outlook report, the International Monetary Fund outlined their long-term projections and suggestions for the sub-Saharan African region in light of the COVID-19 pandemic.
“Few countries in the region will achieve widespread vaccine availability until 2023, on current trends,” Abebe Selassie, Director of the Africa Department at the International Monetary Fund said at a press briefing on Thursday. “With such scant access to vaccines, it leaves many countries in the region bracing for the risk for additional waves of infection.”
The importance of developing and accessing vaccines during this global crisis has been undeniable. While the United States has completed nearly 125 million vaccine jabs, the sub-Saharan African region has not been as successful, administering almost 13.6 million, according to a World Health Organization report.
“We’ve seen truly exceptional global efforts to develop effective vaccines,” said the Director. “Although the processing and deploying has had an unequal start, many wealthy countries have secured enough vaccines for their populations. In contrast, Sub-Saharan African countries are struggling to simply vaccinate essential frontline workers,” said Selassie.
He highlighted that better vaccine roll out numbers could improve regional stability.
South Africa had a massive peak in COVID-19 pandemic cases in January of this year, and has since, initiated an ambitious plan for vaccine distribution. According to the IMF report, mass unemployment, gas and electric outages, and rising inequalities have made it difficult for South Africa to take advantage of the improvements in the global economy.
Selassie highlighted in his opening statement, that “Securing financing for facilities like COVAX, [or COVID-19 Vaccines Global Access], is not just a regional concern but a high-value global public good.”
The number of people living in extreme poverty has risen by 32 million just last year, which will leave long-lasting scars on the economy. Selassie predicts that the region might recover somewhat this year, as more countries open up businesses. However, per capita GDP will not return to pre-pandemic levels until 2025. “This [pandemic] risks reversing years of progress in the region, falling behind advanced countries.”
Policymakers can also tighten the fiscal space in order to address debt vulnerabilities and provide an effective recovery plan. The IMF has moved to help with debt relief, with tailored support depending on the unique country’s needs.
“There is a crucial need for international support,” said the Director of the Africa Department at the IMF. Investment from the IMF will likely include $425 billion over the next five years.
There has already been significant debt easing, but central banks are running out of bandwidth. In efforts to lower inflation rates in Ghana and depreciation in Angola, monetary policymakers are concerned about when the economy rebounds, prices might be unstable. In fact, dependency on such significant monetary support can lead to hyperinflation and unstable currencies, similar to the currency crisis in Zimbabwe.
Ghana, for example, has been stretched increasingly thin as medical aid has been slow to arrive. The IMF predicts that after Ghana’s investment in bonds, which are expected to mature in a few years, post-pandemic recovery may support their debt payments. Also, improvements in digitization have led to promising growth in economic resilience. Methods as simple as e-filing and digital communication create jobs, support accountability and transparency, and boost innovation and progress.
The IMF predicts that the legacy of the COVID-19 pandemic will create a significant GDP gap between sub-Saharan Africa and wealthy countries, which will disrupt the path to progress. With significant monetary instability in the region, the IMF urges policymakers to proceed with caution in responding to the pandemic.