Turning the pandemic into an opportunity

By : Abdelmonem Fawzi

“Always look to life’s bright side” is the name of a comedic song written by Monty Python member Eric Idle. The song first featured in the Python’s film “Life of Brian” and has gone on to become a common sing-along at public events, such as football matches and funerals.

We need to sing this song nowadays. We also need to believe in its meaning.

Let’s make the best of what the crisis gives us. As the good old SWOT analysis, sometimes called situational assessment or situational analysis, tells us: there are not only threats, but also opportunities.

African governments need to find innovative financing models, if they are to turn the economic challenges brought on by the Covid-19 pandemic into opportunities.

Speaking at the 2021 African Economic Conference taking place in Cabo Verde, at least two finance ministers said African governments needed to expand the tax base by tackling illicit financial flows and reducing the mounting debt burden to overcome the challenges of the pandemic.

“We are defining new financial mechanisms,” said Nicolas Kazadi, the Finance Minister of the Democratic Republic of Congo. “We need to use non-conventional models and to think outside the box, or even without the box.”

The finance ministers said Africa had an opportunity to attract massive foreign direct investments by strengthening its institutions and playing down negative publicity, which has been driving up the continent’s risk ratings.

African governments, said the ministers, need to create a society that is ruled by principles, ethics and the law.

The 2021 edition of the Africa Economic Conference, which was opened by President of Cabo Verde, José Maria Neves, takes place amidst the dark cloud of Covid-19 which has negatively affected African economies by reducing revenues and triggering a debt crisis.

With these increasing debt levels, the ministers called for reorganising debts, particularly external debts, to free up resources for other critical public services, such as healthcare and education.

“The public debt is an atomic bomb that is going towards the African continent,” Cabo Verde’s Deputy Prime Minister, Olavo Avelino Garcia Correia, said.

“We cannot have an economy that works only to pay debts,” he added.

He presented Cabo Verde’s case where 60 per cent of revenue goes towards debt servicing.

“This is not sustainable, not only for Cabo Verde, but also for African countries,” he said.

Beyond a debt moratorium, African countries need to restructure and reorganise their external debts.

Garcia added that the debt problem was better solved internally through increased tax collection, while citizens must be guaranteed the transparent use of resources collected.

Kazadi underscored the importance of the role of the private sector in enabling new financing models, including – apart from foreign direct investments – remittances.

“We must not ignore the role of the private sector in reducing poverty and energising development,” Kazadi said.

He added that African governments needed to create strong institutions that were transparent and accountable.

Garcia also cited better governance as the panacea for illicit financing and corruption.

“It is up to Africans to build solid institutions that will stop illicit funds and money laundering,” he said.

There was general agreement among those present that African countries needed to diversify to better face future challenges.

The continent also needed a voice in global and international financial institutions.

“Our institutions cannot stand for peace and security only, but also for growth and development,” Kazadi said.

He said Africans have to do their homework as far as debts are concerned.

Kazadi noted that international partnerships would be instrumental in this regard.

“Technology is also there to help Africa,” he said. “I cannot have an inspector behind every taxpayer.”

He noted that taxpayers’ travel, shopping, income, and everything else has to be registered.

States, he said, can intelligently manage information and lessen tax evasion.

Conference attendees agreed on the need for African states to initiate dialogue and integrate solutions to be able to reduce poverty.

There is also an opportunity to use international solidarity to overcome Africa’s problems and challenges. This requires, however, daily engagement and commitment.

Kazadi encouraged countries, particularly rich and developed ones, to redistribute their share of their new Special Drawing Rights allocations to poor countries that desperately need help.

The conference is organised by the African Development Bank and the United Nations Development Programme.

Nevertheless, the annual Sustainable Development Goals Report provides an overview of the world’s efforts to implement these goals to date.

For many countries, the report says, the response to the pandemic has involved investing in their citizens, enhancing social protection systems and labour markets in order to help the most vulnerable populations.

‘Decent Life’ initiative aims to improve the lives of millions of poor people in rural areas.

Denmark inaugurated its ‘Children First’ project to ensure better conditions and equal opportunities for children.

Cyprus has adopted a support package for employees, the self-employed, vulnerable groups and businesses.