COVID-19: African countries need to quickly ask for debt relief, says Okonjo-Iweala

Ngozi Okonjo-Iweala, two-time minister of finance, says Nigeria and other African countries need to quickly pressure the G7 and G20 for debt-relief in other to deal with the economic and health issues arising from the novel coronavirus. 

Okonjo-Iweala, who was very instrumental in getting Nigeria an $18 billion debt-relief as minister of finance, said African countries in debt need to apply for such relief to free up resources to battle COVID-19.

According to her, if African countries get debt relief, the monies they should pay in servicing debts — which for Nigeria is N2.72 trillion in 2020 budget — can be channeled towards dealing with COVID-19.

In a chat with the BBC, the former managing director of the World Bank, said Africa needs multiple sources of funds to tackle the global pandemic and its economic effects.

“You know we have several sources, you’ve got the African Development Bank, which has just floated a social bond for $3 billion that will be available to the countries on the continent,” she said.

“You have the World Bank that has set aside $14 billion of which they’ve already committed $2 billion to 25 countries — and 11 of them are Africans. Many of our countries need to move, to take advantage of this, and they are willing to commit $150 billion dollars over the next 15 months.

80 Countries have applied for IMF COVID-19 fund

She said “the IMF has put forward $50 billion as an emergency fund, and already 80 countries have applied for this, many of them African”.

“It also has a $1 billion grant fund; catastrophe containment and relief trust, which they can approach. Let me mention my own organisation, GAVI, where I am chair of the board. We have made immediately available $200 million to $300 million grant.”

“Once these monies become available, if the countries get debt relief, that means that the monies they would have been paying to service the debt that they’ve taken from other countries; bilateral debts or from institutions, this monies can now be used to procure food and supplied and support the livelihood of people in the rural and urban area.

“Government can use these resources as part of an intervention fund to help people directly, and I think this is what they should be looking to do. But we need to move quickly, the debt relief we haven’t got it yet.

“There needs to be a great deal of pressure on the G7, G20 to come forward with this measure and then countries need to start availing themselves of the already available resources, and then pressure for the debt relief.”

OKONJO-IWEALA SECURED $18BN DEBT RELIEF FOR NIGERIA

Before 2005, Nigeria had an external debt stock of $36 billion, which had been carried over from the military years, dating back to 1985.

In October 2005, with Okonjo-Iweala as finance minister, Nigeria, and the Paris Club announced a final agreement for debt relief worth $18 billion after Nigeria paid $12 billion.

The deal was completed on April 21, 2006 when Nigeria made its final payment and its books were cleared of any Paris Club debt, bringing Nigeria’s external debt profile to just $3 billion while domestic debt was only about N1 trillion.