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Africa requires $7.1Trn ‘New Deal’ to recover from pandemic – ECA



Africa requires .1Trn ‘New Deal’ to recover from pandemic – ECA

With many African countries battling debt service shackles amid the downward economic trend caused by COVID-19, a $ 7.1 trillion ‘New Deal‘ has been suggested as the only solution. .

This was the position of Mr. Antonio Pedro, Deputy Executive Secretary of the Economic Commission for Africa (ECA) at the ongoing African Economic Conference (AEC) to chart a new path for Africa’s economic recovery after COVID-19.

He compared the proposed New Deal to a similar agreement between 1933 and 1939 during Franklin Roosevelt’s presidency.

He noted that the deal with the United States was worth $ 41.7 billion, an amount he said now equaled $ 653 billion.

Pedro said the new agreement for Africa would be part of the external funding needed, among other things, to address the growing risk of defaults on African debt amid the COVID-19 pandemic.

“On the external front, Africa needs a new deal to recover from the ravages of the pandemic. Roosevelt’s New Deal cost $ 41.7 billion at the time of its inception.

Given Africa’s current population of 1.37 billion, a New Deal would have to generate $ 7.1 trillion in fiction to match the US New Deal on a per capita basis.

“The resources required to sign a New Deal are enormous and cannot be financed exclusively with public resources. Private financing will be essential.

“However, we are all aware that the cost of private fiction is high. At the same time, direct private equity investments are driven more by performance than considerations.

“The combination of public fiction with private resources can redirect more private investment and fiction to social sectors and other orphan sectors through shared risk and risk mitigation,” he said.

He said the ECA had partnered to launch the Liquidity and Sustainability Fund (LSF) on the sidelines of CoP26 with the aim of reducing the cost of portfolio investments in emerging markets and attracting a new class of investors to the continent.

He said the LSF seeks to use borrowed SDRs to leverage possible private fiction for African sovereign bondholders to access short-term fiction using such instruments as collateral.

Source: NAN

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