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COVID-19: Obasanjo, Okonjo-Iweala Seek $44bn Debt Relief For Africa

Uche Usim, Abuja, Chinelo Obogo, Adewale Sanyaolu and Chinwendu Obienyi, Lagos

Former President Olusegun Obasanjo, former Minister of Finance, Dr. Ngozi Okonjo-Iweala, are among over 100 world leaders that have asked the G-20 countries for a $44 billion debt relief for African countries to tackle the Coronavirus pandemic.

In a letter addressed to the G20 nations, the leaders said the 2008 to 2010 economic crises is less complicated than the current pandemic seen across the world and demanded “immediate internationally coordinated action–within the next few days–to address our deepening global health and economic crisis from COVID-19.

They also asked the international community to waive this year’s poorer countries’ debt repayments, including $44 billion due from Africa, and consider future debt relief to allow poor countries the fiscal space to tackle the health and economic impacts of the COVID-19 pandemic.

“In 2008-2010, the immediate economic crisis could be surmounted when the economic fault lines—under-capitalisation of the global banking system—was tackled. Now however, the economic emergency will not be resolved until the health emergency is effectively addressed: the health emergency will not end simply by conquering the disease in one country alone, but by ensuring recovery from COVID-19 in all countries. We ask the G20 to task the IMF and the World Bank to further assess the debt sustainability of affected countries,” the letter read.

Also speaking at an interview on AIT on Thurdsay, April 9, former Finance Minister, Okonjo-Iweala said that most African countries will experience slow growth as a result of the pandemic and many may go into prolonged recession if the problem persists. She then said the reason for asking for debt burden of African countries to be reviewed is to prevent hunger, death and to revive the economies.

She however admitted that getting debt relief is a very difficult process and advised that countries should try and take advantage of grants and that if loans are to be sought, it should be from multi-laterals at very low interest rates which gives five to six years of grace and about 30 years repayment period.

“Right now, we are seeing very low growth and recession coming in many countries. The recession will depend on the extent of the lock-down in many of our countries and maybe the COVID19 may start accelerating in a number of cases. If this continues to accelerate and there are many more deaths, it means that it might be wise to keep the lockdown for longer. The longer you lock down, the more the economy is impacted because there is no economic activity and the more likely you are to go into a very deep recession or even a depression. It is very difficult to forecast but from what we know now, we know we are going to have very low growth that might even go into a contraction for the whole continent.

“There is a big movement which I am part of to try to get additional resources for our countries. Many countries in Africa have an unsustainable debt burden.

Commenting on the development, Managing Director of Financial Derivatives Limited,Mr,Bismark Rewane said the economy is in a coma and anything that could be done to revive it would not be out of place.

He said the fall in commodity prices and contraction in the economy occasioned by the coronavirus pandemic has led the country and Africa to the situation it os at the moment.

He maintained that all buffers required to return the economy to live form all sources is what the economy requires at the moment.

Rewane said multiple sources of support support and a cocktail of measures is urgently required adding that a multi prong approach to it os a welcome development.

Also commenting Boniface Okezie, National President, Progressive Shareholders Association of Nigeria said debt forgiveness was not the solution to our infrastructural deficit.

Meanwhile, a professor of capital market and former Imo state commissioner for Finance, Prof Uche Uwaleke, hailed former President Olusegun Obasanjo and f Dr Ngozi Okonjo-Iweala for championing the efforts to secure debt relief for Africa.

He said: “It was in 2005 when the two of them secured Paris Club debt relief for Nigeria. “This will help Africa. We’re holding the short end of the stick because we have a weak health system. We have weak capacity to deal with the pandemic. So the debt relief will free up funds to channel to health and deal with pandemic.”

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