“We must think outside the box to help the ecosystem of SMEs which constitutes the backbone of African economies”

Tribune Paris will host a high-level summit on the financing of African economies on May 18. This event, which will bring together several heads of state and international institutions, will be held in a context where the Covid-19 pandemic continues to suffocate these economies, despite the recovery strategies put in place by governments with the support of their local and international partners.

The success of the summit will be measured by the concrete solutions proposed there to the significant financing needs facing the continent to mitigate the economic and social impact of the health crisis and strengthen the prospects for a strong, inclusive and resilient recovery.

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Although in the long term, this revival must be carried by the private sector, in particular the ecosystem of SMEs which constitutes the backbone of African economies, it immediately requires a strong commitment from African decision-makers and development partners to move beyond well-trodden paths in order to mobilize the appropriate levels of internal resources and external funding.

For the post-pandemic recovery of African economies

An important step has already been taken thanks to the recent consensus on the need for an allocation of special drawing rights (SDRs) from the IMF to the tune of 650 billion dollars (536 billion euros). If this allocation is approved as planned by the IMF Executive Board by June, it should allow Africa to obtain by the end of the year around $ 33 billion in additional liquidity, including 70% would go to countries south of the Sahara.

However, the allocation of SDRs will have even more impact if it is complemented by a multilateral initiative to reallocate SDRs in favor of low-income countries. The recently expressed intention of the G20 to work in this direction is to be welcomed and implemented as soon as possible. With this issue of SDRs, the member countries of this forum alone could mobilize $ 100 billion by reallocating just under a quarter of their cumulative allocations in the form of loans or grants.

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Part of the resources thus collected could make it possible in particular to increase the IMF’s capacity to offer subsidized loans in order to better support the implementation of resilience strategies and post-pandemic recovery of African economies.

Better share risks with the private sector

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