Before the current crisis, the 2020 growth estimate for the African continent was 3.9%, according to McKinsey & Company. However, the loss of lives and livelihoods caused by the COVID-19 pandemic is expected to turn this positive growth into an unprecedented negative 1.1% according to the African Union.
In response to this crisis, international organizations are introducing significant measures in an effort to address the economic impact of the pandemic. For example, the IMF announced that it would be giving debt relief to 19 countries in Africa, and, with the support of the World Bank, is offering a total of $64bn in global aid packages.
While the challenges to harness new revenue streams have for many decades been at the forefront of strategy discussions for governments in Africa, the arrival of COVID-19 has exacerbated the need for finances, and demanded that these be delivered now.
Africa has suffered a series of health crises in the past, and has shown incredible resilience, cooperation, and adeptness to deal with these, and not only emerge, but prosper through continuing rates of economic growth. For example, by 1999, Africa was the hardest hit by HIV deaths, with United Nations records showing that the continent accounted for 76 per cent of the total 16 million deaths. During this time of the COVID-19 pandemic, Africa is once again called upon to exercise resilience, and demonstrate its ability to act in a unified manner, with cross-border collaboration to mobilize much needed human and financial resources.
Collaborative financing models
The greatest challenge faced by African economies today is the need to allocate scarce financial resources. Governments will need more resources than they have ever had to mobilize. Key to allaying the pandemic and its economic impact, is for governments and decision-makers across the continent to search for alternative financing mechanisms and initiatives, and to generate new revenue streams to alleviate the social and economic cost of this crisis.
The UN and other international organizations have promoted innovative/collaborative financing models in the past to overcome health crises and natural disasters. Carefully-considered and strategically-constructed financing models – which both channel existing finances for maximum impact as well as generate new sources of revenues to replenish the inevitable depletion of government reserves during times of crisis – are absolutely essential to maintain sustainable development of our emerging economies, as well as reduce dependency on dwindling international aid.
Innovative or collaborative financing methods refer to a range of non-traditional mechanisms to raise additional funds for government deployment. This is typically achieved through the use of micro-contributions, public-private partnerships and market-based financial transactions.
A true call for ICT-based cooperation
Information and communication technologies, while necessary to expedite economic advancement even during more ordinary times, are especially crucial tools for decision-makers during times of crisis. Today, the need for digital systems that facilitate accurate and complete tracking of resources and rapidly-changing data points within key economic sectors, has never been greater.
For optimum effectiveness, the deployment of these necessary technologies across Africa, as for all parts of the world facing this historic crisis, requires extraordinary levels of cooperation and collaboration, both at a regional and at an international level. Public and private cooperation frameworks need to be at their most flexible and agile, in order to effectively pool all the knowledge and digital resources for the strongest possible response.
Technology is key to bridging the cross-border, cross-socioeconomic cooperation and collaboration gap. Through the effective deployment of tech and data strategies, governments, societies, and business can jointly enhance their efforts to combat the pandemic and secure economic sectors from the brutal socioeconomic effects of locking countries down.