In an unprecedented show of solidarity, over 30 heads of state and global leaders committed to tackle the crisis of climate change and “build forward better” during a virtual Leaders’ Dialogue convened by the African Development Bank, the Global Center on Adaptation and the Africa Adaptation Initiative.

Leaders rallied behind the bold new “Africa Adaptation Acceleration Program” that aims to mobilize about $25 billion to accelerate climate change adaptation actions across the continent.

https://youtu.be/dlzvSzHSdPY

Built to address the impacts of COVID-19, climate change, the Africa Adaptation Acceleration Program revolves around several transformative initiatives, including Climate Smart Digital Technologies for Agriculture and Food Security, Empowering Youth for Entrepreneurship and Job Creation in Climate Resilience, among others.

The African Development Bank has approved grants worth USD25.1 million to Somalia to enhance the health system, safeguard livelihoods, and support labour force productivity amid the COVID-19 pandemic.

“It is the first time the Bank is leveraging the Regional Operation Envelope resources for a Budget Support Operation. This approach was pertinent to ensure that Somalia has adequate resources to contain the spread of the disease in its territory and limit cross-border impacts that pose serious risks for health, social and economic development for the Horn of Africa sub-region,” said Acting Bank Director General for East Africa, Nnenna Nwabufo.

The North African Bureau of the African Development Bank has launched the 2020 edition of the North Africa Economic Outlook Report, providing an overview of North African economies, based on a regional approach to development.

“Before the spread of the COVID-19 pandemic at the global level, economic growth in North Africa was expected to rebound to 4.4 per cent and 4.5 per cent respectively in 2020 and 2021. However, the uncertain global environment, the COVID-19 pandemic and the projected contraction in advanced economies will negatively impact the growth forecast for the region,” the report said.

Economic growth in #NorthAfrica was expected to rebound to 4.4% and 4.5% respectively in 2020 & 2021. However, the uncertain global environment, #COVID19 and the projected contraction in advanced economies will negatively impact the growth forecast for the region… #2020AEO 1/3

— African Development Bank Group (@AfDB_Group) July 14, 2020

Here are the report’s highlights:

• Among all African regions, North Africa had registered the most important number of COVID-19 confirmed cases as of May 2020.

• The latest projections for 2020 indicate a loss of 5.2 points of growth in the region, from a growth rate of 4.4 per cent to -0.8 per cent if the pandemic were to last until June 2020 (baseline scenario) and a loss of 6.7 points with a growth rate of -2.3 per cent if the pandemic were to perdure until December 2020 (worst-case scenario).

In the second scenario (based on the pandemic lasting through December 2020), growth would fall by 6.7 percentage points, leading to a -2.3% decline. However, economic recovery is forecast for 2021, with regional growth of between 3% and 3.3%.#2020AEO #NorthAfrica 3/3

— African Development Bank Group (@AfDB_Group) July 14, 2020

• In 2019, for the second year in a row, North Africa was the second-best performing region in Africa with a growth rate estimated at 3.7 per cent.

• Except for Libya, the service sector contributes the most to GDP in North Africa. This sector is significantly impacted by the COVID-19 outbreak through travel bans, disruption to transport, distribution, hotels and restaurants, entertainment and so on.

Except for #Libya, the service sector contributes the most to GDP in #NorthAfrica. The share of the service sector in GDP can be as high as 62.7% for #Tunisia in 2019 and 56.3% in #Morocco, whilst the average for the region was 49.2% in 2019… #2020AEO 2/4

— African Development Bank Group (@AfDB_Group) July 14, 2020

• Since 2016, macroeconomic performance has been improving. However, the COVID-19 pandemic and its adverse impact on commodity prices and macroeconomic stability are expected to increase fiscal and current account deficits in North African economies.

• In North Africa reduced access to financial resources represents an important transmission channel of the Coronavirus crisis.

• Over the last decade, the general government debt of North African countries increased, except in Libya.

• In all countries, economic growth has not been inclusive and social and regional disparities remain high. Domestic risks to the outlook include social discontent.

• Countries are confronted with the challenge of making growth pro-employment and offer equal access to social and economic opportunities across regions, particularly in remote and rural areas.

Key Policy Recommendations:

• In North Africa, all countries need to improve business environment competitiveness and implement structural reforms for enhancing public efficiency and allow further development of the private sector. In light of the spread of COVID-19, and its projected impact on regional economies, it’s important that governments allocate adequate resources to deal with the pandemic and mitigate its impact on economic agents.

• North African countries could as Egypt did switch from a model of energy and food subsidies to a model of direct cash transfer to the most vulnerable. In Egypt, Takaful and Karama (“Solidarity and Dignity”) programs were instituted in 2016 and further expanded from 200,000 to 2.3 million households currently benefiting 10 million people.

• Implementation of buffers would prove beneficial given the expected dire impact of climate change on the region. As the world’s most water-scarce region, exacerbated by large-scale irrigation in the agricultural sector, climate change is expected to have severe effects on drought, water supply, food security and tourism, which could, in turn, affect the stability and economic prosperity of the region.

• Overall, the World Bank (2017) estimates that the region will have the greatest economic losses from climate-related water scarcity as a share of GDP by 2050. Investment in climate-resilient agricultural practices is critical given the threats from climate change, which are likely to worsen in thenear future.

• The development of the agribusiness should enhance productivity and address some aspect of regional disparities. Countries should also explore opportunities to reinforce regional integration and trade openness vis-a-vis other African regions, in the framework of the African Continental Free Trade Area.

• Investment in human capital is a necessary condition for the acceleration of economic development. Structural reforms for improving national labour markets and upgrading skills would allow to ease the skills shortage and mismatch in deficit countries.

A survey with over 1,300 women SME owners across 30 African countries conducted by ImpactHER, an impact-driven organization that focuses on bridging the financing gap for women-owned SMEs in Africa, revealed that most women-led SMEs are at risk of permanent business shut down as a result of the pandemic.

The African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) initiative, in collaboration with ImpactHER and UN Women, hosted a virtual high-level panel discussion on empowering women entrepreneurs in the fight against COVID-19.

Panelists and participants discussed the results of an ImpactHER survey of more than 1,300 women-owned small and medium enterprises (SMEs) in 30 African countries about the impact of COVID-19 on their businesses.

Impact of COVID-19 on Women-led Businesses

• Women-led businesses across Africa are already significantly impacted by COVID-19.

• The survey revealed that most women-led SMEs are at risk of permanent business shut down as a result of the pandemic.

• In responding to how COVID-19 has affected their business operations, 80% of the respondents reported that they had to temporarily shut down their business. Of those that are still fully or partially operating, 41% reported that they had significantly reduced the number of work hours, 34% reported that they laid-off workers, and 25% reported that they had to reduce their employees’ salaries.

A survey conducted by @ImpactHERAfrica, with over 1,300 women SME owners across 30 African countries, revealed that most women-led SMEs are at risk of permanent business shutdown as a result of #COVID19. #WomenPostCovid pic.twitter.com/I7qX19QBhx

— African Development Bank Group (@AfDB_Group) July 15, 2020

• Similarly, in a survey conducted by UN Women with 165 women entrepreneurs in Mali, as much as 96% had seen their economic activity reduced in the first two months of the crisis.

In a UN Women survey of 165 women entrepreneurs in #Mali, as much as 96% had seen their economic activity reduced in the first 2 months of #COVID19. Another study in #CotedIvoire also reveals the devastating impact on women-led businesses: https://t.co/dNQC9xltZX #WomenPostCovid pic.twitter.com/as1E690Qtf

— African Development Bank Group (@AfDB_Group) July 15, 2020

• Also, women-led businesses are being impacted at a faster rate than SMEs led by men.

• Over 90% of ImpactHER’s respondents reported that they need the US $12,079,000 as a result of the impact of COVID-19 on their businesses – an average of $9,123 per business (this estimated financial needs was made approximately three weeks into the lockdown). The respondents reported that the funds will be used to pay salaries, office rent, and other ongoing operational support; as well as re-engineering their businesses to be more suited to the world’s new realities.

More than 90% of @ImpactHERAfrica survey respondents reported that they need financial assistance to support income loss. https://t.co/dNQC9xltZX #WomenPostCovid #AFAWA pic.twitter.com/JlJy6Hox2a

— African Development Bank Group (@AfDB_Group) July 15, 2020

• A number of women interviewed also reported an increase in unpaid care work as a result of school closures due to the lockdown measures.

• The lockdowns have severely impacted women-led businesses cash flows, as women SME owners reported decreased revenue, while also having limited reserves to sustain their business.

Gender-Sensitive Policies

To mend the gap, stimulus packages and post COVID-19 policies must be gender-sensitive, they must take into account the barriers that women-led SMEs faced prior to the pandemic that prevented their businesses from achieving their economic potential. In addition to the gender finance gap, the barriers included:

– Gender gap in access to technology
– Lack of information
– Unfavourable Loan Terms

Short-Term Measures

• Stimulus packages must be designed and disbursed from a gender lens perspective to ensure that women-led SMEs can benefit. These packages could be structured such that there is a percentage allocation for women-led SMEs or separate stimulus packages are carved out for women-led SMEs.

• External collateral requirements should be relaxed or no longer be mandated by financial institutions for women-led businesses.

• Women should be involved in Africa’s economic recovery policy formulation processes, especially those that impact SMEs. Women business associations participation would promote targeted interventions that address the unique challenges that women entrepreneurs face during and after the pandemic.

• Governments should implement principles of affirmative procurement for goods and services related to the COVID-19 response, from food to provide food transfers, to masks or other protective equipment.

• African Central Banks and Financial Institutions should be intentional about availing loans with reduced interest rates and longer repayment period to women-led businesses during and after the pandemic.

• African governments should offer tax breaks to African Multinational Enterprises that outsource segments of their operations to African SMEs, especially women-led SMEs.

#COVID19 response needs to be gender smart. Stimulus packages & post pandemic policies must take into account the barriers that women-led SMEs faced prior to the pandemic. Below are some strategies to support women-led businesses. https://t.co/dNQC9xltZX #WomenPostCovid pic.twitter.com/vGZCzniAkv

— African Development Bank Group (@AfDB_Group) July 15, 2020

Medium & Long-Term Measures:

• African banks should work with women-SME organizations to structure viable products that are gender-sensitive, palatable, and address the unique needs of women-led SMEs. Such an approach would allow women entrepreneurs to be well-positioned to access capital.

• African Governments should offer tax breaks for individuals that invest in women-led SMEs. Such a practice would encourage private sector participation in bridging the gender financing gap.

• Financial institutions need to demystify the loan application process by offering credit literacy programs so as to encourage women to apply for loans.

“Finally, the post-COVID19 world will probably be very different from the world we lived in just a few months ago. As countries and societies think about their future and recovery plans and strategies are being shaped, there is an opportunity to Build Back Better and address some of the pre-COVID faults that have led to entrenched gender inequalities including in the world of business,” the policy brief stated.

“Policies which can be game-changers for women entrepreneurs in Africa in the future include land reforms that provide women with equal and effective rights to land, accompanied by the resources and necessary mechanisms to make them happen beyond paper. Also, as countries identify the sectors that will drive growth in the post-COVID era, from green jobs to re-industrialisation efforts, or as borders open up and African Continental Free Trade Area (“AfCFTA”) operationalization picks up, it is critical that women-led businesses are well-positioned in those key areas of the economy through the right combination of education, innovation and private sector development policies,” the brief added.