by Nino Sergi, president emeritus of INTERSOS and policy advisor of LINK
The Summit on the financing of African economies convened in Paris by President Emmanuel Macron was largely the one on financing mechanisms, a shrewd move to acquire authority and prestige by taking up proposals already elaborated in other forums, from the IMF to the World Bank, to the Club of Paris to the finance ministers and central banks of the G20. On the other hand, news is contained in the timid approach to the proposal by American President Joe Biden on the temporary suspension of patents for anti-Covid-19 vaccines in order to allow their widespread production, wherever the capacity to do so exists in the world, contributing to their own strengthening.
The final declaration of May 18, 2021 underlines the seriousness of the recession on the African continent after 25 years of growth , which the pandemic is aggravating in a worrying way. The IMF estimates a need of at least 285 billion dollars of new financing in the five-year period 2021-2025 for investments essential not to jeopardize the gradual achievement of the sustainable development goals of Agenda 2030 and those of Agenda 2063 of the African Union.
If defeating the pandemic is the first priority, also to prevent worrying variants of the virus, the Summit proposed accelerating all the tools already in place (Covax and Avatt in particular) to get large quantities of vaccines to Africa . As? The leader’s statement speaks of full sharing, unblocking exports, support for trade along the entire value chain, development of local capacities for the administration and production of vaccines. With a novelty in the right direction: “This can be facilitated by the voluntary sharing of intellectual property and the active transfer of technology and know-how, in compliance with international legal frameworks, such as pooling of licenses and concluding production agreements to enable local production”. Already on 22 February LINK 2007 had sent a letter to Prime Minister Mario Draghi to ask for Italy’s support for the request of India, South Africa and 150 other countries for the temporary suspension of patents linked to drugs and vaccines against the coronavirus until upon achievement of global immunity. And like LINK 2007 many other organizations, including the C20 and many other associative networks.
However, there is no big news regarding the expansion of the budget availability of the African economies . While going in the right direction, the multilateral commitments and supplementary initiatives listed in the final declaration are mostly in the wake of what has already been decided by the International Financial Institutions and Central Banks or is in an advanced stage of discussion within the G20.
The Italian presidency of the G20 should be able to overcome two shortcomings by finding the consensus of the other partner countries: the limited financial resources made available and the inadequacy of some sacred principles of the international financial system . These appear to remain untouchable, even in the face of a serious crisis like this which is now severely affecting African economies. If instead of economies we spoke of people, millions of women, men, young people, children, communities that with less rigid and targeted aid could restart and provide for their future, perhaps those sacred principles could be considered less sacred.
According to data published by the AFD French Development Agency before the pandemic, African public debt amounted to more than 60% of the continent’s total GDP, equal to a figure of over 1,330 billion dollars . A burden of $1,000 in debt for every African citizen.
A huge amount. The Paris summit confirmed the issuance of $33 billion in special drawing rights (SDRs) for Africa, including $24 billion for sub-Saharan Africa . “We are calling for a swift decision on an allocation of SDRs for an amount expected to reach 650 billion dollars, of which almost 33 billion intended to increase the reserve assets of African countries, increasing it as soon as possible”. The IMF’s global reserve funds in the form of SDRs are a vital tool for providing rapid and unconditional support to global response without further burdening debt. Civil society organizations had asked for a new allocation of 3,000 billion dollars in SDRs, three times more than the 650 planned by international institutions .
The Summit also called on the private sector to make financial and technical resources available for private sector development in Africa. This call is timely given the importance of the growth of African private entrepreneurship and private sector investment alongside the public sector to fill gaps in manufacturing and basic service sectors, to tackle climate change and in particular to create new stable and decent jobs in Africa. But once again the invitation remains overly vague.
The problem of public debt in Africa can find adequate solutions within the UN and in international and intergovernmental institutions, in particular within the G20. The LINK 2007 network presented the Release G20 proposal to the Italian Presidency of the G20 and to European and African institutions which calls for a flexible restructuring of the debt, partial but also total in cases of default, through its transformation into an SDG Fund in local currency (a sort of recovery fund) nominally equal to the value of the agreed reduction and linked to sustainable investments in line with the 2030 Agenda. This Fund, governed by local institutions with the involvement of the original creditors and the IMF, can also serve as financial leverage and guarantees on other funds and investors, mainly for private investments and with the more general objective of creating new and widespread employment.
Thinking, as shown by the Paris declaration, of remedying the African debt crisis first of all by proposing further debt appears, sincerely, to be a recipe that has already proved not to hold up for many low-income countries, demonstrating at the same time the inadequacy of some “sacred principles” of the international financial system.
ROME, May 21st
Even at the G20 Global Health Summit in Rome, chaired on May 21 by President Draghi, there were voices, timid to tell the truth, in favor of the temporary renunciation of intellectual property, alongside pronouncements for overcoming inequalities in the use of vaccines also “because they would produce further and deeper inequalities”. “ Our priority must be to vaccinate the world and do it quickly, ” Draghi said in his speech. To date, Africa has in fact received much less than 1% of production: 32 million vaccines, with countries that have not yet benefited from them at all. While more than 80% of the doses produced were administered in rich countries. It is a situation deemed “unacceptable” by Draghi himself and the European Commission has undertaken to buy at cost price – giving up the profit for pharmaceutical companies after having already made disproportionate quantities – and send 1.3 billion doses to needy countries in the 2021 and as many in 2022.
However , Rome ‘s final declaration remains somewhat disappointing . It takes up what is stated in similar summits without ever having the certainty that intentions are translated into concrete facts with the announced speed. No breakthrough on the liberalization of patents , even if foreseen by the TRIPS agreements of the WTO in particularly serious cases. Who do not understand, it must be deduced, the current pandemic with its serious consequences. It is certainly necessary to protect the research of Big Pharma, the assumption of risk, the appropriate investments. But for the anti-Covid-19 vaccine, the pharmaceutical companies that produce it have already benefited from huge public funding for research and risk coverage and the marketing of the products has produced them staggering revenues.
The Rome declaration instead announces initiatives aimed at “ promoting the multilateral trading system , with the central role of the WTO , open, resilient, diversified, secure, efficient and reliable global supply chains along the entire value chain related to health emergencies , including raw materials to produce vaccines and for the production of and access to medicines, diagnostics, instruments, medical equipment, non-pharmaceutical goods, and raw materials to address public health emergencies”… And to “support low- and income to develop production, handling and distribution skills and capabilities”. In short, commitments that are or should be undertaken in normal bilateral and multilateral cooperation relations , even in the absence of serious pandemics such as Covid-19.
On vaccines, the statement proposes to: “In a spirit of solidarity, join efforts to support in particular the production and supply of vaccines and other supplies and/or financing for the purchase of vaccines, to low- and middle-income countries ”. Big Pharma got the upper hand . They will voluntarily share the patents already well financed by public institutions for a fee . And they came out praised by the Global Health Summit given the announcement of guaranteeing billions of vaccines to low-income countries, with which they will be able to voluntarily share their patents for a fee.
* INTERSOS president emeritus and LINK 2007 policy advisor