By Edwin Ikhuoriam
ONE campaign African Executive Director
ONE is a global movement campaigning to end extreme poverty and preventable disease by 2030, so that everyone, everywhere can lead a life of dignity and opportunity.
Africa’s recovery must be built on decent job creation.
The pandemic’s ramifications, which include the continuous threat of new deadly Covid-19 variants, a deepening economic crisis, the urgent need to address climate change, and now the consequences of Ukraine’s conflict, all threaten global stability and possibility of a disastrous food crisis. While all countries will face the escalating cost of living, African countries, lacking fiscal space to respond will be disproportionately affected. Increased wheat and maize prices will increase import bills, make food less affordable and worsen balance of payments, especially for African countries with rising external debt service payments. Import costs for vegetable oils could double from pre-war levels, resulting in billions of dollars in additional costs — in some nations, the cost per head may exceed government health spending. The impact is enormous and painful across Africa.
The IMF has warned of a divergent recovery in the aftermath of the pandemic, resulting in a growing divide between African and advanced economies. While many wealthy countries have recovered quickly, most African economies are struggling. World leaders have injected up to $23 trillion liquidity into the global economy, but the distribution has been unequal. While developed economies received an average of $11,500 per capita, emerging economies received $127 per capita, and low income countries received only $52 per capita! The IMF issued a global call for the allocation of Special Drawing Rights to boost reserves and expand fiscal space in order for countries, particularly vulnerable LICs, to confront the monetary and fiscal challenges posed by the crisis. A total of $650 billion in SDRs was allocated. But Africa, a continent of 1.3 billion people, received only $33 billion in SDRs (5 percent quota-based SDR distribution) 253 days after the call – a little too late for meaningful impact. Now, there is another call for new SDR issuance to combat the current food, fuel, fertilizer, and financial crises. Between the end of August 2021 and the end of February 2022, aggregate SDR holdings declined by about 10%, indicating that African countries had already begun to deplete their allotment.
The G7 and G20 advanced economies committed to channel $100 billion in SDRs to assist countries facing liquidity and budgetary issues, but nearly a year later, we are just halfway to that goal. ODA continues to stagnate, while the share going to Africa shrinks. More than a decade after the promise was made, the $100 billion in climate finance is yet to be met. Indeed, emergency humanitarian assistance is critical to addressing the escalating hunger problem, but we must go beyond the short-termism and self-interest behavior that have characterized recent years. Africa is forging a course for the future, one that is built on African unity and integration, on autonomy and independence, and on equal engagement with global partners.
African economies have the potential to recover from the pandemic and the Ukraine war, only if decent job creation receives the attention it needs. Youths who are disillusioned are bearing the brunt of the growing unemployment problem. At the peak of the Covid-19 crisis, the continent is estimated to have lost between 20 and 30 million jobs. Many vulnerably employed workers who rely on daily income were pushed further into extreme poverty. The prevalence of working poverty in Africa is so significant that the African working poor now account for 70% of the world’s working poor, while Africa represented only 14% of global employment. The resulting hardship from the ongoing shocks have also shown that it is no longer enough to aim to create jobs, we must also ensure that the jobs created provide a fair income, workplace security, and greater access to social protection so that Africans can better combat this period’s converging crises.
The most impactful solutions to Africa’s job crisis must not be left out of Post-COVID-19 recovery strategies. Investing in transformative and labour-intensive industries such as food systems, digitalization, manufacturing, and green jobs would benefit everyone. Investors can generate enormous returns by investing billions of dollars in these sectors and African youth will get more decent jobs. A win-win situation for all parties is feasible, but only if immediate investments are made. These critical investments in employment creation demand global solidarity directed at Africa’s entrepreneurs. While the commitment made last year by the world’s major development financing institutions (DFIs) to invest an unprecedented $80 billion in Africa-based enterprises over the next five years is a step in the right direction, it must be translated into actual funds.
Africa needs 15 million decent jobs every year to secure its future. The moment has come for global support for African goals, including investments in a continent-wide financial stability mechanism and more equitable access to capital markets. Reforms to address disparities in credit rating agency treatment of African countries, including the establishment of an African credit rating agency are needed to enable Africa’s access to cheaper capital like other developed markets. Access to DFI capital to enable transformation and higher value production in Africa is the most pressing support Africa needs now.