With many African countries struggling from the shackles of debt servicing amid downward economic trend occasioned by COVID-19, a ‘New Deal’ worth $7.1 trillion has been suggested.
Antonio Pedro, Deputy Executive Secretary, Economic Commission for Africa, gave the recommendation at the ongoing African Economic Conference to chart a new path for Africa’s post-COVID-19 economic recovery.
Pedro likened the proposed New Deal to a similar deal by the US between 1933 and 1939 during the presidency of Franklin Roosevelt.
He recalled that the American deal was worth $41.7 billion, an amount which now equalled $653 billion by his estimation.
Pedro said that the new deal for Africa would form part of the external funds required by Africa to, among other things, address the rising risk of African debt defaults amid COVID-19 pandemic.
“On the external front, Africa needs a new deal to recover from the ravages of the pandemic. The Roosevelt’s New Deal cost $41.7billion at the time it was instituted.
“Given Africa’s current population of 1.37 billion, a New Deal would have to deliver $7.1 trillion in financing to equate the US New Deal on a per capita basis.
“The resources required to financing a New Deal are enormous and cannot be funded exclusively through public resources. Private funding will be critical.
“Yet, we are all aware of the cost of private financing; (it) is high. At the same time, private direct capital investments are motivated more by economic rates of return than by social welfare considerations.
“Blending public financing with private resources can redirect more private investments and financing to social and other orphaned sectors through risk-sharing and risk mitigation,” he said.
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