The president of the African Development Bank (AfDB), Akinwumi Adesina. (Pic: AfDB Twitter)
The president of the African Development Bank (AfDB), Akinwumi Adesina. (Pic: AfDB Twitter)

African Development Bank approves R5bn loan to government

By Edward West Time of article published Jul 23, 2020

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The African Development Bank board has approved a R5 billion loan to the government of South Africa, as the country battles one of the largest Covid-19 caseloads in the world.

South Africa is the most affected in Africa, and among the top five in the world in terms of confirmed cases (381 798 as at July 22, with 5 368 deaths).

The loan falls under the Bank’s $10bn Covid-19 Response Facility and will finance South Africa’s Covid-19 Response Support Program, and represents the Bank’s first ever budget support to the country.

The loan follows a request from the government of South Africa.

The purpose of the program is to protect lives and promote access to essential equipment to prevent infection, such as protective personal equipment, sanitizers and gloves, protect livelihoods by preserving jobs, incomes, food security and access to essential public services and protect firms by supporting enterprises in the formal and informal economy to withstand the impacts of Covid-19 and prepare for economic recovery.

South Africa’s ability to respond to the pandemic has implications for neighbouring countries as well as the continent as a whole, given its position as Africa’s second-largest economy after Nigeria.

Even before the pandemic, South Africa was experiencing an economic slump. In 2019, the country registered GDP growth of 0.2 percent – the lowest in a decade – and according to Bank estimates, GDP could drop to the worst in 90 years in 2020.

Projections show a GDP contraction of 6.3 percent and 7.5 percent under baseline and worst-case scenarios, respectively, a statement from the Bank said.

These growth forecasts had placed budgetary constraints on the government’s ability to deal with the health crisis.

The African Development Bank operation was designed in collaboration with other partners, including the International Monetary Fund, World Bank and the New Development Bank.

South Africa is ranked as the most prepared African country to deal with a pandemic, according to a Global Health Security (GHS) Index. Yet significant challenges remain in the public health sector, including underfunding and human resource shortages. While the private health sector is better equipped, it remains unaffordable to the majority of South Africans.

The COVID-19 outbreak is also likely to adversely affect the gains made in controlling other infectious diseases such as TB and HIV/AIDS.

The scaling up of mass testing has also put pressure on capacity at public sector laboratories, and concerns have been raised about the rising numbers of infections among health workers.

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