The COVID-19 pandemic has further exposed and worsened the trends of poverty in Africa, which the World Bank had estimated would make the continent home to 87 percent of the world’s extreme poor by 2030 if trends of growth were not translating into poverty and inequality reduction continued.

The numbers of Africans living on less than $1.90 a day have been rising prior to the pandemic.

In the face of weak and already overwhelmed health systems, most countries across Sub-Saharan Africa responded to the COVID-19 pandemic early with stringent measures to contain the spread of the virus. The lockdown policies adopted by the end of March 2020 in 44 Sub-Saharan African countries led to workplace closures for a majority of workers, restriction of the use of public transport to most citizens, and curfew or lockdown policies requiring most people to stay home. These measures considerably reduced business activity, affecting the micro-and small-scale enterprises of the majority informal sector businesses more than medium- and large-scale enterprises. Assessments in Burkina Faso, Mali and Senegal suggest that one out of four workers had lost their jobs, and one out of two workers had experienced a decline in earnings, with informal workers at higher risk, as they generally rely on daily sales for their earnings, lack mechanisms for collective bargaining, and tend to be in activities that are contact intensive.

Before the pandemic, Africa’s employment sector or labour market has been almost entirely informal, with formal jobs accounting for as low as 3.8 percent in some countries like Senegal. The informal sector largely presented circumstances reeking of underemployment and precarious job conditions for a majority of Africans of working age. About 80 percent of the labour market in Africa overall, is almost of self-employed workers with contributing family workers, a situation likely to remain unchanged in the near future and leading to little or no stable employment income and a lack of social security and no voice at work. Women are affected in a greater proportion than men, as women tend to work more hours for little pay or in unpaid care work, than men. They form a majority of the growing numbers of labourers not covered or protected by general labour laws. They are more likely to have no access to social security, such as maternity protection and benefits. This increases the income poverty gap between women and men in low-income African countries. Worse still, women constitute over 80 percent of farmers in Africa but they have limited rights to land, with as low as five percent of women being registered landowners in some African countries.

Besides women are also: children - over-represented among the poor due to their growing numbers, the elderly and people with disabilities, who are all vulnerable due to their limited access to resources, limited voice and the weak and fledgling government policies. Particularly, about 550 million of Africa’s children are food insecure due to the pandemic, as some lost access to free daily meals and school closures also impact on their future prospects. The elderly, who are usually rendered dependent due to failing health, and with limited incomes, have also been affected. While people with disabilities (PWDs); often assumed to be unable to work due to their forms of impairment, now face even higher rates of poverty. The impact of COVID-19 has thus widened these inequalities, disproportionately impacting SSA and more particularly vulnerable groups within the continent.

Fledgling Social Protection

With the right policies on social spending, including in social protection, these problems of inequality and poverty can be significantly reduced and addressed. Social protection is concerned with protecting and helping those who are poor and vulnerable, in form of income or consumption transfers to the poor and vulnerable against livelihood risks. It is intended to enhance their social status and uphold their rights with the overall objective of reducing their economic and social vulnerabilities. Social protection is essential for advancing social justice and promoting inclusive growth, and accelerating progress towards achieving the globally agreed 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs). The common formal types of social protection include: cash transfers to target groups, social pensions for the elderly, in-kind transfers, school feeding and public works programmes, among others.

There is evidence to suggest that social protection transfers (social pensions and cash transfers) have significant impact on both poverty and vulnerability, and inequality reduction, as they have resulted into increased access to education and reduced the access costs of other services and utilities. Social protection has taken a more central role in domestic policymaking and is expanding in Africa. This is especially so after the efforts of the International Labour Council (ILC) to create the agenda and floors for improving social protection. The agenda aim at providing fiscally sustainable and nationally appropriate social protection systems and measures for all and reinforcing commitments to the SDGs by achieving “substantial coverage of the poor and the vulnerable”. But coverage is yet too low to significantly reduce poverty and inequality as it is only South Africa, Mauritius, Botswana, Liberia, Tanzania, Lesotho, Swaziland and Mauritania, which have a social protection index above 0.50.

In spite of evidence of pre-existing traditional practices of social protection, there seems to be little or no information about a formal African drive for a home-grown social protection agenda. This is further beset by several challenges as: the perceptions that a common African voice is absent; an African definition of social protection has not been articulated; the multiplicity of donor interests and interventions may have stifled the emergence of a consistent and harmonised set of social protection objectives that are intrinsically African; traditional African social protection mechanisms have been undermined by the imposition of conventional western social protection approaches; and policies which are in place are not consistent with actions on the ground. Furthermore, as African countries now try to institutionalise social protection, a number of major challenges exist for policy makers and policy-making in Africa, such as: reaching the poorest of the poor in order to minimise errors of exclusion, promoting social insurance in a context of high informality, confronting the employment challenge, and harnessing a demographic dividend.

There are also other challenges in implementing social protection programmes in Africa due to: lack of broad based targeting of social protection efforts, lack of comprehensive plans for social protection programmes, poor inter-sectoral coordination and collaboration with civil society, and poor or limited budget allocations to social protection, poor mobilisation of resources to scale-up social protection programmes, high dependency on donor funding for social protection, low institutional capacity to develop and implement social protection programmes, lack of reliable data on which policies on social protection could be based, and lack of monitoring and evaluation of the effectiveness of social protection programmes undertaken. All these imply the need for increased funding for social protection programmes in Sub-Saharan Africa, more so in an era seized by the COVID-19 pandemic.

The Shrinking Fiscal Space, Rising Debts and Implications in Building Back

Notwithstanding the benefits attributed to social protection, it has cost implications that need to be adequately funded. Limited or no funding is the leading cause of failure of most social protection programmes in Africa. Most social protection is funded by national taxes but since few people in developing countries are in formal-sector employment, tax funding tends to come from indirect or consumption taxes.

The COVID-19 further crippled Africa’s capacity, which was already very limited before the pandemic due to low and declining tax-to-GDP ratios, which stood at 13.4 percent in 2018, and border closures also slowed trade, thus limiting revenue collections. These have added to the revenue losses due to illicit financial flows, corruption, inefficient tax administration, signing away Africa’s tax base and regressive tax policies.

As an immediate solution, African countries borrowed additional funds to ameliorate the immediate health and economic impact of the pandemic. This was done at a time when 20 African countries were already classified as in external debt distress, or at high risk of debt distress before COVID-19. And debt levels were already projected to rise from 58 percent of GDP in 2019 to 64 percent in 2020, 2 percent points higher than the pre-COVID 19 projection and continue to deteriorate in several countries. The continent already has a high debt burden, spending roughly US$40bn annually on servicing its debt, fuelled in part, by large loans for infrastructure development. Earlier reckless appetite for European and Chinese loans by a number of African governments, has severely constricted spending on public services. In Uganda, debt repayments have reached historic highs, and the government has cut spending on education and health by 12 percent. Kenya is planning to borrow another Eurobond to repay the old Eurobonds, which started maturing in 2020. The share of non-Paris club sovereign creditors among bilateral creditors has risen from 15 percent in 2007 to 30 percent in 2016, while the share of Paris Club bilateral debt plummeted from 25 to 7 percent, and private debt has grown significantly from less than 10 percent of total debt in the early 2000s to exceeding 30 percent. The share of tax revenues used to pay interest on debt for low-income countries (LICs), which are mostly in Africa, was expected to increase from 19.8 percent in 2019 to 32.9 percent in 2020. Devoting more revenues to debt servicing implies less money for sustainable development. In particular, debt repayments squeeze out social investments and undermine the fight against poverty and inequality. Debts make the African governments accountable first to rich countries, then to their own local elites; and finally, if convenient, to the people.

The relationship between public debt commitments and alleviating the lot of the poor is seen to be conflictive. Debt repayment is seen as obstructing financing for programmes which are “socially just and ecologically sustainable development”. Studies have indicated that an increase in the stock of debt forces governments worldwide to reduce total expenditures and increase total revenues, as a consequence of tightening of the overall fiscal balance. Social expenditures are thus hit disproportionately hard, as it is easy for governments to postpone social expenditures since they are seen as long-term investments with virtually no short-run welfare returns. Social expenditures are also seen to represent pure transfers with little or no direct or indirect effect on fiscal revenues for long periods of time. On the other hand, it has been proved that debt defaults on average have a positive effect on social expenditures since they do help reallocate expenditures in favour of the social sectors.

Which Way to Build Better?

In the current context of Sub-Saharan Africa’s growing economic precarity, addressing the problems of poverty and inequality, especially after the COVID-19 pandemic to build back better requires an immediate solution. The countries in Sub-Saharan Africa need to urgently save up resources for economic recovery through primary expenditures that invest in the people, for both the immediate and long-term recovery efforts. With huge debt burdens and the economic down-turn induced by the pandemic, the African countries will have an uphill task to recover fully. The hope the African Development Bank offers by projecting real GDP growth in the continent by 3.4 percent in 2021, after contracting by 2.1 percent in 2020, is threatened by domestic and external risks, with the increasing debt burden ranking high among them. Therefore, the initial effort for Africa’s economic recovery from the pandemic induced shocks should be seen highly in terms of debt resolution.

An AU Commission called for an ambitious plan for the cancellation of total African external debt ($US236 billion). African Ministers of Finance called for an emergency economic stimulus package of US$100 billion, including a waiver of all interest payments, estimated at US$44 billion for 2020, and extension of repayment periods. The G20 and multilateral institutions – the IMF and World Bank responded with the Debt Service Suspension Initiative (DSSI) for an initial 6-month period, and encouraged private and multilateral creditors to suspend debt payments. However, the DSSI is only a form of morphine to the debt-trapped countries in Africa because, for some countries like Ghana, participating in the DSSI Initiative could negatively affect the cost of existing loans.

What Africa needs urgently is a systemic transformation in the global financial infrastructure and domestic resource governance, to manage debts better. With crisis also comes opportunity and the pandemic has provided an opportunity to plan and build back better. Pope Francis made these comments during his visit to Iraq early in 2021: “Following a crisis, it is not enough simply to rebuild; we need to rebuild well, so that all can enjoy a dignified life. We never emerge from a crisis the same as we were; we emerge from it either better or worse”. Building better also implies meeting the basic needs of so many of our brothers and sisters as an act of charity and justice, and contributes to a lasting peace. It would be good to heed to this and other voices of the pope and other well-meaning persons, in relooking the African and global debt infrastructure from the perspective of how it impacts on the poor and vulnerable. The numbers of Africans living on less than $1.90 a day have been rising prior to the pandemic.

In the face of weak and already overwhelmed health systems, most countries across Sub-Saharan Africa responded to the COVID-19 pandemic early with stringent measures to contain the spread of the virus. The lockdown policies adopted by the end of March 2020 in 44 Sub-Saharan African countries led to workplace closures for a majority of workers, restriction of the use of public transport to most citizens, and curfew or lockdown policies requiring most people to stay home. These measures considerably reduced business activity, affecting the micro-and small-scale enterprises of the majority informal sector businesses more than medium- and large-scale enterprises. Assessments in Burkina Faso, Mali and Senegal suggest that one out of four workers had lost their jobs, and one out of two workers had experienced a decline in earnings, with informal workers at higher risk, as they generally rely on daily sales for their earnings, lack mechanisms for collective bargaining, and tend to be in activities that are contact intensive.

Before the pandemic, Africa’s employment sector or labour market has been almost entirely informal, with formal jobs accounting for as low as 3.8 percent in some countries like Senegal. The informal sector largely presented circumstances reeking of underemployment and precarious job conditions for a majority of Africans of working age. About 80 percent of the labour market in Africa overall, is almost of self-employed workers with contributing family workers, a situation likely to remain unchanged in the near future and leading to little or no stable employment income and a lack of social security and no voice at work. Women are affected in a greater proportion than men, as women tend to work more hours for little pay or in unpaid care work, than men. They form a majority of the growing numbers of labourers not covered or protected by general labour laws. They are more likely to have no access to social security, such as maternity protection and benefits. This increases the income poverty gap between women and men in low-income African countries. Worse still, women constitute over 80 percent of farmers in Africa but they have limited rights to land, with as low as five percent of women being registered landowners in some African countries.

Besides women are also: children - over-represented among the poor due to their growing numbers, the elderly and people with disabilities, who are all vulnerable due to their limited access to resources, limited voice and the weak and fledgling government policies. Particularly, about 550 million of Africa’s children are food insecure due to the pandemic, as some lost access to free daily meals and school closures also impact on their future prospects. The elderly, who are usually rendered dependent due to failing health, and with limited incomes, have also been affected. While people with disabilities (PWDs); often assumed to be unable to work due to their forms of impairment, now face even higher rates of poverty. The impact of COVID-19 has thus widened these inequalities, disproportionately impacting SSA and more particularly vulnerable groups within the continent.

Fledgling Social Protection

With the right policies on social spending, including in social protection, these problems of inequality and poverty can be significantly reduced and addressed. Social protection is concerned with protecting and helping those who are poor and vulnerable, in form of income or consumption transfers to the poor and vulnerable against livelihood risks. It is intended to enhance their social status and uphold their rights with the overall objective of reducing their economic and social vulnerabilities. Social protection is essential for advancing social justice and promoting inclusive growth, and accelerating progress towards achieving the globally agreed 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs). The common formal types of social protection include: cash transfers to target groups, social pensions for the elderly, in-kind transfers, school feeding and public works programmes, among others.

There is evidence to suggest that social protection transfers (social pensions and cash transfers) have significant impact on both poverty and vulnerability, and inequality reduction, as they have resulted into increased access to education and reduced the access costs of other services and utilities. Social protection has taken a more central role in domestic policymaking and is expanding in Africa. This is especially so after the efforts of the International Labour Council (ILC) to create the agenda and floors for improving social protection. The agenda aim at providing fiscally sustainable and nationally appropriate social protection systems and measures for all and reinforcing commitments to the SDGs by achieving “substantial coverage of the poor and the vulnerable”. But coverage is yet too low to significantly reduce poverty and inequality as it is only South Africa, Mauritius, Botswana, Liberia, Tanzania, Lesotho, Swaziland and Mauritania, which have a social protection index above 0.50.

In spite of evidence of pre-existing traditional practices of social protection, there seems to be little or no information about a formal African drive for a home-grown social protection agenda. This is further beset by several challenges as: the perceptions that a common African voice is absent; an African definition of social protection has not been articulated; the multiplicity of donor interests and interventions may have stifled the emergence of a consistent and harmonised set of social protection objectives that are intrinsically African; traditional African social protection mechanisms have been undermined by the imposition of conventional western social protection approaches; and policies which are in place are not consistent with actions on the ground. Furthermore, as African countries now try to institutionalise social protection, a number of major challenges exist for policy makers and policy-making in Africa, such as: reaching the poorest of the poor in order to minimise errors of exclusion, promoting social insurance in a context of high informality, confronting the employment challenge, and harnessing a demographic dividend.

There are also other challenges in implementing social protection programmes in Africa due to: lack of broad based targeting of social protection efforts, lack of comprehensive plans for social protection programmes, poor inter-sectoral coordination and collaboration with civil society, and poor or limited budget allocations to social protection, poor mobilisation of resources to scale-up social protection programmes, high dependency on donor funding for social protection, low institutional capacity to develop and implement social protection programmes, lack of reliable data on which policies on social protection could be based, and lack of monitoring and evaluation of the effectiveness of social protection programmes undertaken. All these imply the need for increased funding for social protection programmes in Sub-Saharan Africa, more so in an era seized by the COVID-19 pandemic.

The Shrinking Fiscal Space, Rising Debts and Implications in Building Back

Notwithstanding the benefits attributed to social protection, it has cost implications that need to be adequately funded. Limited or no funding is the leading cause of failure of most social protection programmes in Africa. Most social protection is funded by national taxes but since few people in developing countries are in formal-sector employment, tax funding tends to come from indirect or consumption taxes.

The COVID-19 further crippled Africa’s capacity, which was already very limited before the pandemic due to low and declining tax-to-GDP ratios, which stood at 13.4 percent in 2018, and border closures also slowed trade, thus limiting revenue collections. These have added to the revenue losses due to illicit financial flows, corruption, inefficient tax administration, signing away Africa’s tax base and regressive tax policies.

As an immediate solution, African countries borrowed additional funds to ameliorate the immediate health and economic impact of the pandemic. This was done at a time when 20 African countries were already classified as in external debt distress, or at high risk of debt distress before COVID-19. And debt levels were already projected to rise from 58 percent of GDP in 2019 to 64 percent in 2020, 2 percent points higher than the pre-COVID 19 projection and continue to deteriorate in several countries. The continent already has a high debt burden, spending roughly US$40bn annually on servicing its debt, fuelled in part, by large loans for infrastructure development. Earlier reckless appetite for European and Chinese loans by a number of African governments, has severely constricted spending on public services. In Uganda, debt repayments have reached historic highs, and the government has cut spending on education and health by 12 percent. Kenya is planning to borrow another Eurobond to repay the old Eurobonds, which started maturing in 2020. The share of non-Paris club sovereign creditors among bilateral creditors has risen from 15 percent in 2007 to 30 percent in 2016, while the share of Paris Club bilateral debt plummeted from 25 to 7 percent, and private debt has grown significantly from less than 10 percent of total debt in the early 2000s to exceeding 30 percent. The share of tax revenues used to pay interest on debt for low-income countries (LICs), which are mostly in Africa, was expected to increase from 19.8 percent in 2019 to 32.9 percent in 2020. Devoting more revenues to debt servicing implies less money for sustainable development. In particular, debt repayments squeeze out social investments and undermine the fight against poverty and inequality. Debts make the African governments accountable first to rich countries, then to their own local elites; and finally, if convenient, to the people.

The relationship between public debt commitments and alleviating the lot of the poor is seen to be conflictive. Debt repayment is seen as obstructing financing for programmes which are “socially just and ecologically sustainable development”. Studies have indicated that an increase in the stock of debt forces governments worldwide to reduce total expenditures and increase total revenues, as a consequence of tightening of the overall fiscal balance. Social expenditures are thus hit disproportionately hard, as it is easy for governments to postpone social expenditures since they are seen as long-term investments with virtually no short-run welfare returns. Social expenditures are also seen to represent pure transfers with little or no direct or indirect effect on fiscal revenues for long periods of time. On the other hand, it has been proved that debt defaults on average have a positive effect on social expenditures since they do help reallocate expenditures in favour of the social sectors.

Which Way to Build Better?

In the current context of Sub-Saharan Africa’s growing economic precarity, addressing the problems of poverty and inequality, especially after the COVID-19 pandemic to build back better requires an immediate solution. The countries in Sub-Saharan Africa need to urgently save up resources for economic recovery through primary expenditures that invest in the people, for both the immediate and long-term recovery efforts. With huge debt burdens and the economic down-turn induced by the pandemic, the African countries will have an uphill task to recover fully. The hope the African Development Bank offers by projecting real GDP growth in the continent by 3.4 percent in 2021, after contracting by 2.1 percent in 2020, is threatened by domestic and external risks, with the increasing debt burden ranking high among them. Therefore, the initial effort for Africa’s economic recovery from the pandemic induced shocks should be seen highly in terms of debt resolution.

An AU Commission called for an ambitious plan for the cancellation of total African external debt ($US236 billion). African Ministers of Finance called for an emergency economic stimulus package of US$100 billion, including a waiver of all interest payments, estimated at US$44 billion for 2020, and extension of repayment periods. The G20 and multilateral institutions – the IMF and World Bank responded with the Debt Service Suspension Initiative (DSSI) for an initial 6-month period, and encouraged private and multilateral creditors to suspend debt payments. However, the DSSI is only a form of morphine to the debt-trapped countries in Africa because, for some countries like Ghana, participating in the DSSI Initiative could negatively affect the cost of existing loans.

What Africa needs urgently is a systemic transformation in the global financial infrastructure and domestic resource governance, to manage debts better. With crisis also comes opportunity and the pandemic has provided an opportunity to plan and build back better. Pope Francis made these comments during his visit to Iraq early in 2021: “Following a crisis, it is not enough simply to rebuild; we need to rebuild well, so that all can enjoy a dignified life. We never emerge from a crisis the same as we were; we emerge from it either better or worse”. Building better also implies meeting the basic needs of so many of our brothers and sisters as an act of charity and justice, and contributes to a lasting peace. It would be good to heed to this and other voices of the pope and other well-meaning persons, in relooking the African and global debt infrastructure from the perspective of how it impacts on the poor and vulnerable.