Investors/lenders urged to help Africa as new study forecasts shrinking economies in 2020

by Karen Faulkner, Worthy News Correspondent

(Worthy News) – According to a new study, many African nations struggling with the COVID-19 pandemic may find themselves defaulting on debt repayments, DW reports. Weak currencies, higher interest rates, and reduced oil prices could result in African governments losing an estimated US$45 billion in revenue this year alone, the study found.

Published by the Institute for Security Studies (ISS), Gordon Institute of Business Science and the Frederick S Pardee Center for International Futures, the report says Africa’s projected average economic growth is now just 4.3% from 2020 to 2040.

The report says up to 12 million Africans have fallen into extreme poverty during the pandemic and this figure may reach 26 million by 2021. Moreover, almost 570 million Africans were forecast to be living in extreme poverty by 2030 but the pandemic could increase this figure to 631 million, DW reports.

“The biggest challenge is basically growth,” Jakkie Cilliers, the founder and former Executive Director of the ISS told DW. “COVID-19 is going to have a huge impact on growth in Africa and while we have to deal with the health and the mortality impact in the short term, this accentuates the importance of restructuring African economies for much more rapid growth. That is the only thing that is going to allow us to eventually recover from COVID-19.”

The report urges lenders and investors to suspend or cancel the debts of African nations in order to help the continent recover from the coronavirus crisis.

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