France to host African Summit on Covid-19 financing

Kenya’s President Uhuru Kenyatta is among African heads of state invited for a conference hosted by the French government to discuss how to finance economies on the continent to recover from Covid-19 shocks.

A note shared by the Élysée Palace, the official residence of the French President, said more than a dozen leaders from Africa have confirmed attending the Summit on Tuesday, either physically at the Grand Palais or virtually. Kenya is expected to attend virtually, the statement added.

Kenya, Senegal, Ethiopia and South Africa have been among the vocal countries calling for a review of debt repayments or relief for poor countries.

The continent had named special envoys to mobilise funds against Covid-19 including Ivorian banker Tidjane Thiam, former AfDB head Donald Kaberuka, WTO boss Ngozi Okonjo-Iweala and former South African Finance Minister Trevor Manuel.

Kenya, for instance, is faced with more than Ksh3.8 trillion ($35.4 billion) of debt to foreign lenders, including China, IMF, World Bank, AfDB, Germany, Italy and France.

In January, Kenya was granted a repayment break by the Paris Club, worth Ksh32.9 billion ($306.8 million), to help ease the financial distress from Covid-19. That break ends in June. The Paris Club includes lenders such as France, Belgium, Canada, Denmark, Germany, Italy, Japan, South Korea, Spain and the US.

The Tuesday conference is President Macron’s proposal to host creditors and debtors to discuss ways of providing funding to certain sectors of African economy.

One suggestion he has put forward is debt relief for both public and private entities hit hardest by the Covid-19 pandemic.

The Chadian government, then under President Idriss Deby who died in April, proposed that private entities who had borrowed money before the pandemic should also be considered for forgiveness or rearranged repayments.

Ahead of the Summit, French government officials told the media that they hope the presence of lenders and African leaders will help provide an open solution on reducing the burden of loan repayments.

“This will be an opportunity for creditors to sit at the same table, which is unique because previously some countries (lenders) negotiated separately with their debtors. The G20 system now requires negotiations (for debt relief) to be based on the same method,” an official from the Palace told journalists on Friday evening during a virtual press conference.

“We expect that this will provide some additional transparency about the nature of debt and also give us a clear picture of the debt at hand,” he added in the briefing.

France has proposed that IMF Special Drawing Rights (SDRs) be reallocated to Africa, to help the continent continue providing crucial services in the pandemic season. As foreign exchange instruments, the SDRs are kept by the IMF in special accounts and represent certain values allocated to each country and which can be exchanged to finance imports.

The IMF is scheduled to decide, next month, on whether to issue $650 billion, of which $24 billion will be allocated to Africa. French officials think the portion for Africa is insufficient and have asked that rights meant for richer countries be channelled to the African continent.

A tentative programme circulated to the media on Friday indicated that Presidents of Kenya, Tanzania and South Africa will participate virtually. Others from Angola, Burkina Faso, the Democratic Republic of Congo, Côte d'Ivoire, Egypt, Ethiopia, Ghana, Mali, Mauritania, Mozambique, Nigeria, Rwanda, Senegal, Sudan, Togo and Tunisia will attend the conference physically.

Other participants will include representatives from the World Bank, International Monetary Fund (IMF), Africa Development Bank (AfDB), the European Union, UN, World Trade Organisation, Organisation of Economic Development, and officials from the Paris Club members.

In a briefing on Friday, French officials said the summit will focus on “private sector and incentivise countries” to recovery.

“We expect outcomes that will be based on country-by-country assistance. There will be a mechanism at the IMF and it will be up to the specific countries to make their individual requests,” added the official from the Élysée Palace.

Of concern to African countries, however, is the nagging issue of vaccines and access. Mostly dependent on the Covax facility, most African countries including Kenya have had to make do with delays for the second dose. Nairobi says it could be delayed by at least 12 weeks.

France says it supports waiver on intellectual property rights to enable African countries to manufacture the vaccines locally. But that will also depend on whether the rich countries can share technology and whether local firms can get enough funding to take on the task to produce millions of doses.

The continent has reported the fewest cases in the world, but experts have warned its weak health system makes it vulnerable to continual waves of the pandemic.

The organisers say the Summit will also specifically address the transition in Sudan “to provide an opportunity for Prime Minister Abdalla Hamdok to introduce his reforms to investors.” Initially sanctioned by the US for sponsoring terrorism, Sudan was relieved in December after agreeing to compensate American victims of terrorism. It is now eligible to do business with the outside world, including borrowing and seeking debt relief.