The spring meeting of the Fund – Bank has not thrown open anything unpredictable. Discerning the takeaways of the week-long exercise to the African region is difficult since the packages announced or are in the anvil may take time to implement or may even get caught up in the labyrinth of delays; bureaucratic or otherwise. Undeniably, the fund-bank meeting is taking place at a time global growth prospects have been reviewed downwards both by the IMF and the World Bank in their respective projections riding on the back of global inflation, commodity, particularly foodstuff crunch, and weakening supply-side economics. This is particularly relevant to emerging and developing economies (EMDEs). They remain vulnerable to growth weaknesses in Advanced Economies (AEs) coupled with domestic challenges attributed to limited fiscal space, constrained labor markets, subdued domestic demand, and the ongoing Russian-Ukraine conflict.
What did Africa expect from the Fund-Bank meeting, participated by representatives of 180 countries of all hues and sizes? Foremost is a pragmatic debt restructuring process that can address the mind boggling debt burden of its economies, which aggravated poverty and destitution. Not so stressed agenda but implied and echoed in the previous fund-bank meetings and other forums was a review for imposing sanctions on countries on the plea that sanctions affected mostly vulnerable sections of the citizens and not perpetrators of actions that attract sanctions. African countries have deliberated on these issues at a separate meeting on the sidelines of the event. Let us flag some of their observations and concerns. A sweeping generalization is that the developing world, particularly the least developed among the African continent, is disenchanted with the present pace of debt restructuring.
Undeniably, there have been some positive steps towards that. To name a few; the launch of the Global Sovereign Debt Roundtable (GSDR) and the IMF’s efforts, in close collaboration with the World Bank, to improve information sharing with creditors, including the Debt Sustainability Analysis (DSA). The objectives of these steps are to further explore ways to enable the IMF to support its vulnerable members. The other redeeming feature is the launch of the IMF’s Enterprise Risk Management (ERM) Framework. Also, needed coordination among the IMF, the World Bank, and G20 to work together, keeping a target to relieve the debt burden. Unfortunately, debts are mounting mostly because of external factors like the impact of the Covid-19 pandemic, the Russia – Ukraine war, and the consequent spiralling of commodity prices, devaluation of local currencies against the US dollar, and a host of other issues.
Pushing climate change into the vortex of the global development agenda augurs well, going by the sinister impact it is scripting on human lives. Climatic vagaries like floods, droughts, soil erosion, sea level rise, and other multitudes of environment-related havoc waiting to happen are central to the African continent, though causes that trigger may be lying beyond the region. Yet, there has to be a process that should fast-track climate-related issues in a concerted manner. Undeniably, that joint effort should get the right traction and direction, rather than piecemeal approaches and high-decibel oratorial cliches that abound.
Africa is looking at a massive effort to avert the climate crisis as much as it aspires for the flow of sustainable investments in segments ranging from clean energy, environment-friendly mining, pollution-free manufacturing, and importantly organic farming. In the cacophony of investment announcements that are made whether, from the US, China, or other Western countries, how much is directed at sustainable development is a debatable point.
Mining and manufacturing bring quid pro quo results to the investors. Investing in social sectors like education and healthcare may not yield any direct results in the short or medium term to the investor community. But in the long run, that can be a sustainable path to earn goodwill to the investors. Private investments that are coming into the region should have an unmistakable trend of investing in inclusive growth. That should be a focus of the fund and bank to press upon investors. Happily, the recent visit of US Vice President Kamala Harris made the right pitch exhorting the US private sector to invest in the social sector. It is to be seen whether the US will walk the talk. That will be a trailblazing example for other countries to follow since an economically upward-moving Africa provides mind boggling opportunities for its stakeholders, not alone a continent-wide market but also a pool of young hands to work for the aging global population. That underscores the need for skilling and reskilling the people to take advantage of its young demographic profile and make them employable.
There is a general consensus that the working of these hallowed institutions should be course corrected to make them relevant to the time and their objectives contextual. Many feel that greater representation and say should be accorded to the developing world, particularly to Africa, which has been playing a pivotal role in the development of other regions exploiting its natural resources and other primary products. That reverse pitch for revamping multilateral organizations is easier said than done. But some baby steps can be taken to ensure equity and fairness in these hallowed institutions.
