Africa’s COVID-19 Recovery Challenge: How the G20 Can Bridge the Development Financing Gap

The policy brief examines the severe fiscal constraints facing African countries during COVID-19 recovery, noting that while advanced economies mobilised about 6% of GDP, African countries mobilised barely 1%. It highlights the inadequacy of current debt relief mechanisms like the DSSI and the Common Framework, and the high cost of borrowing from international capital markets due to unfair credit ratings. The author proposes five policy priorities: establishing national donor coordination frameworks, reallocating public investment to de-risk private projects, extending the DSSI for two years with partial debt cancellation, creating a transparent multilateral framework for debt resolution involving commercial creditors, and exploring the establishment of independent, publicly owned credit rating agencies.

• African countries face a massive financing gap for recovery, requiring an additional $285 billion through 2025 for basic recovery and twice that amount to return to pre-pandemic levels and transform their economies.
• There is a stark disparity in the fiscal response to the pandemic between advanced economies and African nations; advanced economies mobilised approximately 6% of their GDP, whereas African countries mobilised barely 1%.
• Public debt has risen sharply across Sub-Saharan Africa, with 95% of low-income developing countries in the region recording significant increases in public debt stocks in 2020. In some countries, such as Nigeria, Kenya, Angola, Ghana, and Zambia, interest payments are forecast to exceed 20% of government revenue in 2021.
• African governments face unfairly high borrowing costs in international capital markets, with government bond spreads averaging 5.7 percentage points higher than other borrowers.
• Existing debt relief initiatives are considered insufficient. The G20's Debt Service Suspension Initiative (DSSI) has provided $5.7 billion in relief to 43 countries, but its effectiveness is hindered by the lack of participation from private creditors and unclear positions from China.
• Credit rating agencies have contributed to the financing challenge by downgrading at least 10 African countries within the first year of the pandemic, including Angola, Botswana, Cameroon, Cape Verde, Democratic Republic of the Congo, Gabon, Mauritius, Nigeria, South Africa, and Zambia.
• Global donor coordination has declined over the last decade, leading to fragmented aid resources and a shift away from general budget support toward project aid and blended financing.

APA

South African Institute of International Affairs (2021). Africa’s COVID-19 Recovery Challenge: How the G20 Can Bridge the Development Financing Gap. https://saiia.org.za/research/africas-covid-19-recovery-challenge-how-the-g20-can-bridge-the-development-financing-gap/

Chicago

South African Institute of International Affairs. Africa’s COVID-19 Recovery Challenge: How the G20 Can Bridge the Development Financing Gap. 2021. https://saiia.org.za/research/africas-covid-19-recovery-challenge-how-the-g20-can-bridge-the-development-financing-gap/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Africa’s COVID-19 Recovery Challenge: How the G20 Can Bridge the Development Financing Gap |date=15 December 2021 |url=https://saiia.org.za/research/africas-covid-19-recovery-challenge-how-the-g20-can-bridge-the-development-financing-gap/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2021africas, author = {{South African Institute of International Affairs}}, title = {{Africa’s COVID-19 Recovery Challenge: How the G20 Can Bridge the Development Financing Gap}}, institution = {South African Institute of International Affairs}, year = {2021}, month = dec, url = {https://saiia.org.za/research/africas-covid-19-recovery-challenge-how-the-g20-can-bridge-the-development-financing-gap/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }