ONE: Why the G20 should extend its debt relief initiative through 2021

As the 75th United Nations General Assembly came to a close, discussions on the lasting impact of the global COVID-19 pandemic were still at the forefront. The G20 had previously endorsed the Debt Service Suspension Initiative (DSSI) back in April, allowing low-income countries to suspend debt payments for the remainder of the year. However, as the year draws to an end, the call for extending this debt relief through 2021 is gaining traction. The advocacy group ONE is leading the charge for this extension, emphasizing its crucial importance in aiding the African continent's economic recovery, particularly in the East African region. The East African Community (EAC) has not been immune to the effects of the pandemic. The region experienced a significant downturn in its economy, with sectors like the Kenyan flower industry being particularly hard hit. Despite these challenges, there have been positive developments. While new COVID-19 cases surged in countries like Rwanda, Uganda, and Kenya in the months of July, August, and September, there has been a notable decline in recent numbers. Additionally, trade within the EAC has shown signs of improvement, with measures like mobile lab testing for truckers facilitating the transportation of goods across borders. These steps have contributed to a gradual recovery in trade activities within the region. ONE's push for extending the debt relief initiative through 2021 is aimed at providing continued support to countries in the EAC and beyond. The initiative allows participating countries to redirect resources that would have been used for debt payments towards critical sectors such as education, healthcare, and social services. While 23 African nations have already joined the DSSI, there are concerns about the potential impact on credit ratings due to participation in the initiative. ONE underscores the importance of leveraging other financial tools like Special Drawing Rights (SDRs) from the IMF to further bolster liquidity support for African countries. Serah Makka-Ugbabe, the Nigeria Director of ONE, highlighted the urgent need for debt relief extension, emphasizing the triple threat of COVID-19 encompassing health, economic, and food security crises for Africa. Given the continent's impending recession and the limited fiscal capacity of many African nations, the call for $100 billion in debt relief is crucial to prevent severe economic downturns and ensure social safety nets for citizens. While developed economies have implemented substantial economic stimulus packages, Africa is facing a liquidity crunch that requires external support to navigate its recovery effectively. The potential repercussions of extending debt relief, such as credit downgrades, are acknowledged. However, Makka-Ugbabe asserts that in times of extraordinary hardship like the current crisis, rules governing financial institutions need to be reevaluated to serve their intended purpose. By shifting focus towards building alternative revenue sources and enhancing economic resilience, African governments can better prepare for future crises and mitigate the long-term impacts of debt relief extensions. In summary, extending the debt relief initiative through 2021 is not only vital for Africa's immediate recovery from the COVID-19 pandemic but also essential for building a more robust and sustainable economic foundation for the continent. By prioritizing investments in critical sectors and restructuring financial mechanisms to support African nations, the path to recovery can be smoother and more inclusive for all citizens. The collective call for debt relief extension underscores the urgent need for global solidarity and cooperation in overcoming the challenges posed by the ongoing crisis.