President Cyril Ramaphosa has called for the World Bank and International Monetary Fund (IMF) to provide more funding help vulnerable countries impacted by the Covid-19 pandemic.
Writing in his weekly open letter to the public, Ramaphosa said that this should include a greater allocation of the IMF’s ‘special drawing rights’.
Special drawing rights (SDR) are an international reserve asset that can be converted into five currencies: the dollar, euro, yen, British pound and yuan.
When these are allocated by the IMF, recipient nations can hold them as part of their foreign currency reserves or exchange them for the hard currency of other IMF members.
The seller pays 0.05% interest on such sales if its SDR holdings dip below its IMF-allotted level. The appeal of special drawing rights to poorer nations is that they come condition-free, unlike many of the fund’s loan programs.
The rights work on the basis of membership quotas.
Under current conditions, around $33 billion (R460 billion) will be released to increase the reserves of African countries. Ramaphosa said that this is not sufficient.
“African leaders have argued that an amount of $33 billion, while welcome, is not sufficient to meet the challenges that the continent faces,” he said.
“As the more developed economies are set to receive much of the $650 billion of Special Drawing Rights to be issued, we believe that 25%, which equates to $162.5 billion, should be made available to African countries.”
Other measures world bodies should implement include increased concessional financing by these international institutions and development agencies, and additional measures led by the G20 countries to provide African countries with debt relief, he said.
While further support is required, Ramaphosa said that African countries are also looking to attract investment and remain independent from international partners.
“As African countries, we want to help ourselves and not be told what is good for us. The principle of ‘nothing about us without us’ should be applied,” he said.
“It is important that we affirm our sovereignty as free and independent states capable of determining the destiny of our continent.”
While countries have immediate financing needs, Ramaphosa said that a sustainable economic recovery can only be assured if countries increase levels of investment on the continent. “Investing in African economies will contribute to making Africa the next champion of global growth.”
Ramaphosa said that the African Continental Free Trade Area will play a key role in the continental recovery, with a greater role envisaged for the continental network of African public development banks to mobilise funding to support key projects in health, education, infrastructure, green growth and other sectors.
“Ours must become a continent that is thriving and prosperous, not one from which its people are dying in an attempt to leave.
“As a country, we are part of Africa and Africa is part of us. What happens in one part of our continent affects us all, and so we must work together to recover from this crisis, and to ensure that our continent grows and thrives.”