Africa and Asia are ‘intertwined’ – Experts offer ways to conquer debt challenges and forge economic ties at Asian launch of African Economic Outlook
Overcoming Africa’s debt challenges will not only benefit the continent, but profit its partners in Asia, and the world economy as a whole, participants heard at a webinar to promote the 2021 African Economic Outlook among Asian audiences.
This was the second such webinar for the region, following the successful Asia launch of the 2020 African Economic Outlook webinar last year, co-organized by the Asia External Representation Office and the Macroeconomic Policy, Forecasting & Research Department of the African Development Bank.
About 400 participants from across the African and Asian continents attended the virtual event on 20 May to hear what the African Economic Outlook had to say this year. The African Economic Outlook is the Bank’s flagship report that serves as a tool for economic intelligence, policy dialogue, and operational effectiveness in Africa.
Following a presentation on the 2021 African Economic Outlook, Mr. Takashi Hanajiri, Head of the Bank’s Asia Office, moderated a panel discussion, featuring Dr. Jingying Sun, Deputy Chief of Staff at the National Institute for Global Strategy at the Chinese Academy of Social Sciences, and Professor Padmashree Gehl Sampath, Fellow and Senior Advisor at the Berkman Klein Center at Harvard University.
Sun said China has been actively engaged in international debt relief efforts, such as the G20 Debt Service Suspension Initiative and the Common Framework. The total debt service payments suspended by China amount to $1.35 billion, with 23 countries benefiting from the initiative. She further explained that because “not more than 5 % of special drawing rights of the International Monetary Fund is currently allocated to Africa, the continent could recycle that of rich countries, including Asian economies.”
Sampath emphasized that the “G20 initiative should also include private creditors and that collaboration between Asia and Africa should be more structured.”
During a keynote speech, Dr. Khaled Sherif, Vice President for Regional Development, Integration and Business Delivery at the African Development Bank, underscored the importance of the webinar for the Bank’s Asian stakeholders given that the region is becoming an increasingly important source of Africa’s external debt. Bilateral loans from the Bank’s four non-regional member countries in Asia – China, India, Japan, and Korea – represented more than 15% of the continent’s total external debt at the end of 2019. Also, Asia is now Africa’s main trading partner in merchandise goods, accounting for 40% of total trade in 2019. Therefore, it was in the interests of both parties that Africa rapidly recover from the Covid-19 pandemic.
“The fates of African and Asian economies are intertwined and this webinar presents a good opportunity to come up with innovative policy options to revive and strengthen the economic ties between the two partners,” Sherif said.
Dr. Chuku, OIC-Manager of the Bank’s Macroeconomic Policy, Debt Sustainability and Forecasting Division, presented the findings of the 2021 AEO. He called on countries to improve coordination and step up reforms in order to resolve debt challenges. He also noted that the success of debt relief initiatives for Africa would depend on the active participation of Asian countries, given the significant share of Africa’s debt from Asia. “Stronger business ties between Africa and Asia would make the economic recovery of both regions more durable because of the close co-movement of economic activity between the two regions,” Chuku said.
Dr. Adamon Mukasa, Senior Research Economist at the Bank, added that about 39 million people were at risk of falling into extreme poverty in Africa in 2021 if the right policies were not implemented. He stressed that the expansion of social safety nets, further economic diversification and transformation were essential for an equitable and sustainable recovery.