The United Nations Economic Commission for Africa (ECA) convened a meeting to seek solutions that will ensure African economies enjoy continued market access and meet their private sector debt service obligations.
The United Nations Economic Commission for Africa (ECA) meeting was between the Africa Private Sector Working Group, African Finance Ministers and the African Union (AU) Special Envoy on COVID-19 which aimed at finding new financing solutions to provide additional resources for countries to reduce the effects of the COVID-19 pandemic. It also aimed at finding ways to improve the profile and terms of Africa’s commercial debt obligations so that Africa can better confront the health crisis.
The Africa Private Sector Working Group is a recently formed group which represents leading private creditors to African countries.
ECA’s Executive Secretary, Ms. Vera Songwe stressed that “African countries are committed to meeting all their obligations to commercial creditors in a timely manner and want to maintain access to international debt markets for the build back period.” She also added, ‘’Most African countries were on a successful reform track prior to the crisis, that is why they had access to the capital markets.”
During the meeting, discussions focused on ways in which both African governments and commercial creditors interests could be aligned to deal with the double crisis of an economic recession and a health pandemic.
In order to maintain post-pandemic access to international debt markets for development finance and on having an ongoing coordinated dialogue with creditors, the importance of maintaining Eurobond coupon payments was agreed on by the Finance Ministers.
Speaking on behalf of the creditor group, the Senior Investment Manager at Aberdeen Asset Management, Mr. Kevin Daly said; “We expressed our desire to support African countries address liquidity pressures that have arisen due to the crisis, and by ensuring they remain current on their Eurobonds, we believe financing opportunities will materialize soon.”
Mr Daly also noted that the creditor group was proposing some innovative financing solutions including purpose bonds that are targeted to social development goals.
“These would be appealing to investors who are increasingly focused on social development goal issues, and instruments that are partially guaranteed by multilateral institutions and that could help to ease liquidity pressures,” said Mr. Daly.
All ministers including ones from Cameroon, Senegal, Kenya and Ghana stressed on the importance of keeping market access.