At a time like this, when the world is being ravaged by COVID-19, a number of countries and pharmaceutical institutions are racing to develop vaccines, and more importantly, find cure for the disease. This is also unfortunately a period, when global trade is severely impacted by the pandemic and the world economy is collapsing. Speaking with Arise News Network, Dr. Ngozi Okonjo-Iweala, the chair of GAVI, The Vaccine Alliance, an organisation at the centre of development and distribution of vaccines, and who is also vying for the position of World Trade Organisation director general, argues that vaccine is the most sustainable solution to the scourge as she also gives the recipe for a robust intra-African trade. Besides, the two-time Nigeria’s finance minister and former World Bank managing director, in this interview, monitored by THISDAY, cautions Nigeria and other African countries on debt, advising them against taking loans they can’t service. Kunle Aderinokun presents the excerpts:
As the chairperson of The GAVI Alliance, could you bring us up to speed on what your organisation is doing in terms of vaccine and the race for a vaccine for COVID-19?
GAVI, The Vaccine Alliance, whose board I chair, is one of the central organisations involved in trying to find, develop and distribute COVID-19 vaccine or vaccines. At the moment, the World Health Organisation (WHO) in conjunction with world leaders launched a project; an international project with the idea of accelerating development and manufacturing and distribution of the COVID-19 vaccines. As soon as these vaccines or vaccine are ready and certified to be of high quality state for humans and then are manufactured, in the right number of doses, GAVI will discuss and negotiate with the manufacturers for sufficient doses which it will then distribute in a manner that will be affordable and equitable to developing countries and in fact all over the world. That is the role GAVI would play, to make sure that this vaccine gets to all who need it.
Do you think there is so much emphasis on vaccine? I asked, because we’ve had the likes of common cold and malaria that have no vaccines for years. What is so important about COVID-19 and what do you say to those who say we are spending too much on something we know so little about?
Well, there is a good point that there are infectious diseases in the past which no vaccine has yet been found; I mean, HIV/AIDS is one where they are still searching for a vaccine, but the reason why people are focusing on vaccines is because this is the most sustainable solution to the problem of COVID-19. If you can prevent it, the better. There is a flu vaccine as you know which many people over here take each year, of course you can have other remedies like therapeutic medicines you take when you get the virus. But why will you want to wait until you get it? Vaccines are the best preventive measures and the most cost-effective way of dealing with diseases; you wouldn’t spend as much money as you would once you have everybody vaccinated.
Beyond the debt relief African countries usually secure from foreign creditors especially China. There is still a clamour by some countries for debt forgiveness. Do you think this is something creditors are ready to do, giving the effect of the pandemic on global economy?
As you know, I am one of the members of the African Union envoy on COVID-19 along with four other high level Africans, to try and find resources for the continent and one of the key things we are arguing for, is for a two-year standstill. We are saying that we need this standstill across the board, on bilateral and commercial debt in order to give countries relief. Put resources in their hands that they would have used to service their debts, they can use it to fight the impact of this pandemic. And the G20 has opened the door by saying that the grant, stands still till the end of this year and we think that is not enough; we are pushing. During the two-year standstill, we can now have the chance to look at each country because each country is likely different in terms of the burden of debt, and the debt service that it has to do compared to the revenue it has. This will give us the chance to look into some countries, who will need their debts re-profiled; it is not about debt forgiveness, it is about rescheduling.
There may be other poorer countries that need the debt forgiveness like the International Monetary Fund has already given 19 low-income countries in Africa debt forgiveness or debt relief, to the tune of $198 million. May be some countries will need that, so we will look at it. However, you cannot do all these things unless you have a standstill that gives you time to examine these issues and that is what we think is most important now.
Giving your experience working with the World Bank, what kind of developmental assistance do you think the bank can provide to African countries handling this pandemic at a time like this?
First of all, I want to say how much African countries themselves are helping themselves. It is a quite impressing the number of measures they’ve taken. In many countries, taxes have been suspended or canceled for businesses and households. People have canceled tariffs; there have been many measures put in place by African countries. African countries have also contributed $60 million along with African philanthropists to a fund that the African Union has opened. So before we talk about other people helping, we have to ask, what have we done for ourselves? And we have done quite a lot; we’ve implemented fiscal stimulus of 0.10 per cent of GDP on the continent. This is not enough, so that is why, it is then necessary that the AU has asked that we look for a resources outside and the World Bank has given some emergency relief to African countries and other developing countries to enable them cope with the health crisis. This is almost $300 million, but they’ve also committed $14 billion to help countries fight the economic and health impacts of the pandemic. The IMF has committed $11 billion as at this moment, Islamic Development Bank about $1.3 billion and so you have various organisations and you know that the African Development Bank has a $10 billion COVID-19 fund for the continent.
It is quite worrying for some analysts that China is Africa’s biggest creditor. Should the continent be worried and what can the government do to pre-empt the economic implication of China’s troubled economy and the Post-COVID-19 pandemic era?
Well I think that China is one of the G20 and it has agreed along with the other G20 members to go into this standstill. Of course, we are still pushing China to be a leader in terms of granting African countries this two years so that we can then look for them at the bilateral debt of each country and know how to treat it; so I think China is coming along. My general advice on debt to every African country is to go cautiously, and never to take on more debts than they can service, by growing their economy. You always need to look not only at debt to GDP ratios but also debt service to revenue. Can you afford to service the debt? So with respect to China and other creditors, yes, they can help you build infrastructure. To grow your economy is okay to take some amount of debt, but please do it very cautiously.
Now, coming to the issues of how to deal with the impact of China’s economy and link to Africa in Post-COVID-19, this is a very important question because China has become one of the biggest markets for our exports, so of course, when the Chinese economy is down, that means the demands for our export is also lower and this is going to be an issue because the Chinese economy is expected by the IMF projection to grow may be at 1per cent this year. In fact, China has not seen this kind of growth for decades! Their economy has been growing well, like 6per cent, so when it grows at 1per cent, that means that for us, this is going to be problematic. Europe is going to contract! So we need to ask ourselves: what we can do now in order to diversify our economy for the long term so that we don’t or we are not so dependent on export?
You have highlighted what African countries are doing to respond to this pandemic in financial terms, but beyond the debt, which a lot of African countries are struggling with, what worries you the most about African economy?
I think what worries me the most, but also gives me much hope is the issue of employment. We have a very young population; in most of our countries 60 per cent of the population is 35 years and below, that means, jobs is the key. So, what do we do with our youth? In our economy, we have to look at every opportunity of creating job and in the post-pandemic, we have the chance to really re-look at the way our development is going, we have a chance to look at some supply chains that we can bring back on the continent and improve our manufacturing base. We have the African continental free trade agreement, may be some of our countries can specialise in manufacturing certain things which it can trade with neighbours. You know we import 94 per cent of the pharmaceutical products we use on the continent! Why can’t some countries to specialise in the manufacture some of those products? Nigeria is one with a large population, South Africa is another; there are others with that capability. My worry is, how do we create good jobs for our young people? And how do we support our young entrepreneurs, so that they can create jobs for themselves and others? That is my biggest worry, but I can see a lot of opportunities in Africa and I have hope that we can do it.
In line with the African 2063 vision, how can Nigeria and African countries truly optimize this intra-African trade?
I think we can launch the continental free trade agreement. It is supposed to be launched in the month of July, but because of the COVID-19 pandemic, maybe that will be postponed. I think we should do it as soon as possible. We should look to specialisation; if we all produce the same things, then trading with each other will not be as effective as it should be. We really need to step back and look at what are the things that countries can specialise in, maybe there are those who can do well in manufacturing textiles, in processing agricultural product of one type or the other and trading with the neighbours! I think this is the way we need to look at it.
How do we increase that trade? Another thing I want to mention is of course logistics, and I think that the African countries have been working well on this. How do we improve borders closures and remove all the checkpoints so that goods can move easily from one country to the other? So these are some of the things; we need to look at the remaining obstacles, we need to implement the trade, but above all, some countries need to specialise in producing one product or the other that we can trade with each other. This is of course a longer term dream and plan. We also need to go digital; technology is enabling a lot of trade and this is something else we need to look at. How can it facilitate increase trade within the continent?
You said unemployment is the one that gives you great concern, but I will like to ask you, how can African countries provide jobs without stable, efficient, low carbon, climate friendly energy source? How can they do that? Why is power such a problematic issue on the continent?
Power supply is a big issue. 55 per cent of our households on the continent still do not have access to power and there businesses as well and without this, we cannot really move forward that is why I mentioned infrastructure; improving that will be key. I think that each country is in a different position, but many are struggling with how to have an effective means of transmission and distribution of power. In many countries now, generating power is not so much an issue because countries are having options, another thing is to bring in, independent power producers, but transmission and distribution at an affordable price to the population. But also a price to clear the market and enable our power companies to operate in a profitable manner; that is what we are struggling with. My own strong belief is that we haven’t work out the financial basis for our power sector in many countries and that is what is holding us back so we really need to sit back and work out the finances for each sector. What investment do we need? Many countries have not invested in maintaining their power sector for years! How do we pay transmission and distribution companies, how do we make the whole power sector work financially? That is the key thing that is holding us back.
You also mentioned something really important, talking of energy that is climate-friendly. I want you to know that two third of the power we need on the continent has not yet been developed, so we have a huge chance in Africa that any new power development can be with renewables; things that are low carbon types of power sources and I think that is a winner and we can actually lead the world in this! And we have the opportunity, because we are very good with renewables.
You are also on the board of twitter and how has this pandemic affected global outlook and how can Nigeria avoid a shake-up?
Right now I can tell you that all projections for global economic outlook don’t look very good. The preliminary projections we have for the continent are for a contraction of about 2 per cent and I think for Nigeria, it is in the neighbourhood of about 3 per cent, but the IMF is going to produce new projections in the month of June and from all indications they are not going to look too good. So, for the short term, I think because of the impact of the pandemic, there is not so much we can do. What we need to do is to start planning for a better economic outlook from 2021. We need to look inside to see how we can manage and generate more internal demand.
You know we have a particular problem in Nigeria, the biggest export we have which, is oil, is now experiencing some of the lowest prices we’ve seen in years and in fact it is not just the low price but the fact that we have cargoes of oil in Nigeria. In other countries, the demand for oil has gaped. So we need to ask ourselves: how we focus on the other sectors of the economies that can help us generate growth? And I assure you that we have it. We have agriculture and we need to focus on investing in that. We have the creative industry on the continent that creates a lot of jobs for young people; let’s focus on that. We also have some manufacturing capabilities, but how do we make sure they have power supply so that they can indeed function. So we need to focus on the non-oil sector, we also need to focus on gas because there is still demand; people are still using gas. Even if they are not using oil and gas is seen as a transition fuel, that leads us, maybe, 10 years down the line to begin to put reliance on the renewables. We do have sectors we can focus on, let’s do that.
But it seems like every time there is problem with oil, I mean oil crisis, we all run to diversification of the non-oil sector. And I am speaking particularly for Nigeria; when you look at the performances of that sector through succeeding governments in Nigeria, their performances have been moderate at best. How can we fast track diversifying the revenue not just the economy but the revenue of that sector? What do you think we are doing wrongly and what should we be prioritising?
You are right, but I don’t think I agree with you that performance in those sectors are moderate. Actually, if you look at some of the numbers of growth within the economy, you will see that of the oil sector has fallen as the percentage of the GDP and also as the contributor. We have this divergent economy that agriculture has been growing quite well, I think creative industry that were not even measured before we re-based the economy five or six years ago are now contributing! Though, we have not managed the tax. We’re now finding ways to generate revenues out of these sectors. We have highly been depending on one revenue source which is the oil and that is not good. What we need to do is to figure out ways to tax those other sectors better. It is not going to be easy because a lot of their activities in those sectors are in the informal sector with businesses that are probably not registered. So we have to embark on a long-term strategy. This is not something you are going to accomplish over night! How do we attract the young people who are creating businesses? Women who are very big in the informal sector, how do we support them, to register their businesses and then eventually down the line, maybe four or five years from now become tax payers? How do we look at agriculture processing to modernise it so it can also become part of the formal sector? These are some of the things that we have to do, or introduce in order to enlarge our tax base so that we can tax these sectors better.
Looking at the continent’s response to the COVID-19, some say that we are seeing different approaches and this may hinder fast-tracking finding a cure to the pandemic which is home-grown solution in the continent, what is your take on that? Do you think there should be one coordinated response on the continent or do you agree that it’s not one size fits all, hence the current approach is okay?
First of all let me say that we should commend the leaders on the continent for the speed with which they’ve acted. Actually I’ve been quite surprised at the unity of purpose that has come. On the continental level, the African Union moved quickly to develop a fund that can support the African CDC and other CDCs within the continent. They have appointed an envoy to look at procuring medical supplies and a platform for the entire continent is being built as we speak, where all countries can go and see what supplies are available. The AU, the heads of states have all acted with unity on this, which is very impressive. They have also implemented all these lockdowns which politically, is not easy when most of our people earn on a daily basis. Having said that, I don’t think there is a one size fits all in this response, in fact even within a country, there is no one size fits all response! The way you have to look at it is, say, which area, what is happening in different localities? It may be that one area doesn’t have as much COVID-19 cases as other places, so in that area you may want to say okay we can gradually open up; we don’t have to implement a complete lockdown. While other areas might be hotspots that has a lot of COVID-19 cases, then you will want to act differently there. Similarly, between countries, you cannot have a one size fits all approach! You have to have a very nuance approach in order to handle this.
Of course, there are some over all guidelines that everybody must obey, which is the hand washing as much as possibly you can, and the wearing of face masks and the physical distancing. Those should be practised everywhere even where they aren’t much cases, because if you don’t do it, the disease will spread quickly. Beyond that, you have to have a nuance strategy.
Finally, share with us your thoughts on the current development in the African Development Bank as we do have a Nigerian, Dr. Adesina heading that organisation in the eye of the storm. What does this mean to Dr. Adesina?
I think Dr. Adesina has done a good job with the bank. He has done a good job; he is one of our own. My extreme hope with this, is that things will come out right; he will find a way through the problem.