AfDB approves R5 billion to support South Africa's Covid-19 response
The approved loan is the first-ever budget support provided to South Africa by the bank.
The African Development Bank (AfDB) has approved a loan of approximately R5 billion ($288 million) for South Africa to support the country's fiscal response to the Covid-19 pandemic. In a statement released on Wednesday, the AfDB said the loan will be drawn from the bank’s $10 billion Covid-19 Response Facility.
The AfDB made the approval following a request from the South African government. In early March 2020 when the country confirmed its first COVID-19 case, the government declared a national state of disaster in line with the South African Disaster Management Act, 2002. Last month, Finance minister, Tito Mboweni, said the government’s response would counteract the effects of the pandemic with an “unprecedented set of measures.” Central to its response is a R500 billion Covid-19 economic relief programme.
The aim of the South African COVID-19 Response Support Programme, according to the AfDB, is to i) protect lives and promote access to essential equipment to prevent infection, such as protective personal equipment, sanitizers and gloves; (ii) protect livelihoods by preserving jobs, incomes, food security and access to essential public services; (iii) protect firms by supporting enterprises in the formal and informal economy to withstand the impact of Covid-19 and prepare for economic recovery.
The second largest economy on the continent, after Nigeria, is estimated to contract by 7.5 per cent in 2020 in the worse-case scenario, according to the AfDB. (This is a faster GDP contraction compared to the 7.2 per cent output decline the bank has estimated for Nigeria this year under the same scenario.) AfDB said the approved loan is the first-ever budget support provided to South Africa by the bank.
According to the Global Health Security (GHS) Index – a project of the Nuclear Threat Initiative and the Johns Hopkins Center for Health Security – South Africa is ranked as the most prepared African country to deal with a pandemic. The country ranks 34 out of 195 countries with an index score of 54.8 on the 2019 GHS index, compared to Nigeria's ranking of 96 and index score of 37.8.
However, South Africa currently accounts for over half of the Covid-19 caseloads in Africa, recording nearly 400,000 infections and 5,940 deaths as of Wednesday. AfDB said significant challenges remain in the public health sector, including underfunding and human resource shortages.
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