The African Export-Import Bank (Afreximbank) has announced a $3-billion facility, named Pandemic Trade Impact Mitigation Facility (PATIMFA), to help African countries deal with the economic and health impacts of the COVID-19 pandemic. . . . It will support member country central banks, and other financial institutions to meet trade debt payments that fall due and to avert trade payment defaults, said Afreximbank. It will also be available to support and stabilize the foreign exchange resources of central banks of member countries, enabling them to support critical imports under emergency conditions. In addition, PATIMFA will assist member countries whose fiscal revenues are tied to specific export revenues, such as mineral royalties, to manage any sudden fiscal revenue declines as a result of reduced export earnings. It will also provide emergency trade finance facilities for import of urgent needs to combat the pandemic, including medicine, medical equipment, hospital refitting, etc. (Ibid.)
Bowman's, a law firm with offices in East and South Africa that has been producing some interesting commentary on the changing COVID-19 landscape in the region.
Portions of that discussion follow. They highlight a few important points. The first is that Africa remains tightly bound up in global trade flows.But now the flows have evolved form simple two way currents toward old colonial centers, to a more complicated multiple site of flows to competitor states--principally China. Yet, in the end, the character of African states' engagement does nor appear to have changed much. Much of what is African trade remains dependent on higher valuing adding "apex" states and the satisfaction of their needs. None of this is surprising, but the extent to which COVID-19 affects economics which then affects the (fragile) economies of African states cannot be understated. Second, the character of African trade, its quality, is changing slowly. That is both good, but it also presents a trap. While the old colonial dynamic continues to operate, whether undertaken within America First, Belt & Road, or some variant of the new and improved European models, grounded on trade for natural resources exported to states that then produce high value goods for import back to African markets, African states have moved slowly toward indigenization of some productive sectors. But it is hardly enough yet and African states rise or fall on the needs of apex sates for resources or to travel to African states for tourism. Some of that expansion, however, is related to projections of foreign investment for purposes of resource extraction. Africa is full of stories of apex states insisting on importing their collateral businesses to tend to the needs of imported workers brought over to undertake foreign operations. That is the trap, then, which arises form the connection between the need to negotiate away resources and the growth of domestic production. Third, even this development of indigenous markets served by indigenous production is itself undercut by the New Era economic relationships that are built around both the extraction of resources and the preferred treatment for finished goods from the states to which the resources are directed. The resulting dependency becomes more exposed where in periods of epidemic the need for resources shrinks while the availability of goods shrinks. Fourth, the ability of African states, or the African Union institutions to ameliorate effects washing into Africa from its investment partners is limited. Notwithstanding the efforts, for example, of Afreximbank described above, other national facilities are now substantially stressed because of the fall of demand for commodities. Sovereign wealth funds fueled by resource extraction income and other funds are going to be challenged in this environment. In the shadow of COVID-19, it suggests that, even if African states are able to avoid the worst of the pandemic (and that is unlikely--the situation in Nigeria from the first week of April 202 is telling) in terms of human costs--African states will effectively bear a substantial economic burden of the economic consequences of the pandemic--at least for the short and medium term.
Covid-19: Economic impact on East and southern Africa