Paris hosted African and European leaders and representatives of international financial institutions on 17-18 to attend the International Conference on Sudan and the Summit on Financing African Economies.
The events were part of French President Emmanuel Macron’s efforts to boost France-Africa relations, restore Paris’ role in the continent, and support the democratic transition in Sudan.
Moreover, France has been endeavoring to spread security and stability in Africa, realizing it ultimately reflects on Europe. France has been having fears concerning the influx of refugees to Europe and the consequential possible rising tide of terrorism.
First- Supporting Sudan’s transition
After being removed from the list of countries harboring terrorism in the end of 2020, Sudan got rid of a classification that majorly hindered its economic growth, and restricted any foreign investments to be made in the country. France sought to be the gate in which Sudan would go through to reach the international community by holding the two summits.
The conference consisted of three sessions, the first on new Sudan, the second on its economic reforms and the third on opportunities for investment in infrastructure, agriculture, energy, mining and information and communication technology.
The Sudanese government aims from the Paris Conference to reintegrate into the international community and to reduce its debt burden, which exceeds $60 billion, in addition to attracting foreign investments to Sudan in the fields of energy, mining, infrastructure, agriculture and communications; these goals were partially achieved by the end of the conference.
1- Multiple Sudanese gains:
Khartoum achieved a set of gains from the Paris conferences, the most prominent of which are:
- Pledges to cancel Sudan’s debts
Sudan secured pledges and waivers of billions of dollars in bilateral debt, during the first day of the conference, which took place on 17 May in Paris. France announced its intention to cancel the debt on Sudan, estimated at $5 billion, which is one of the largest debts on Sudan.
Similarly, Norway announced the cancellation of $4.5 billion of Sudan’s debt, while both Germany and Italy pledged to cancel the debts on Sudan, which are worth $1.5 billion, as well as Saudi Arabia, which asserted that it would start taking the necessary steps towards cancelling the debts on Sudan, estimated at $5 billion.
Moreover, Egypt announced its participation in the international initiative to settle Sudan’s debt through using Egypt’s share in the International Monetary fund to resolve the doubtful debts. The United States, Sweden and Italy expressed their willingness to provide grants, which would help cover the debt arrears, which are estimated to be about $13 billion, including interests and penalties.
Sudan needs to get rid of its external debts, which act as a major obstacle to reviving the economy, which is suffering major crisis, these external debts are predicted to be over $60 million, and their majority consists of arrears and interests, which have accumulated due to Sudan failing to regularly pay the installments and the annual interests over the years. The debt is originally set at about $18 billion.
- Investments in health and energy
Sudan, rich with resources, aims to attract foreign investments. The summit witnessed 18 investment projects made by the Sudanese government, which were welcomed by the participants, and the World Bank allocated $2 billion to Sudan to be invested in health and energy programs throughout the next 10 months. Similarly, the African Import and Finance Bank provided $700 million to finance energy and communication projects in Sudan.
- Rescheduling Sudan’s debts
France provided a $1.5 billion bridge loan to pay Sudan’s arrears to the International Monetary Fund, and previously, Sudan paid its arrears to the World Bank with the help of a bridge loan of $1 billion, granted by the United States. Sudan also settled its arrears with the African Development Bank with a bridge loan granted by the UK, Sweden and Ireland worth $413 billion.
Consequently, Sudan got rid of $3 billion worth of arrears of its debts to international institutions, which allows Sudan to benefit from the Heavily Indebted Poor Countries (HIPC), which Sudan is expected to enter in July 2021.
After Sudan implemented the set of economic reforms made by the International Monetary Fund, and after the major countries repaid Sudan’s sovereignty debt arrears (which cannot be waived) to the International Monetary Fund, the World Bank and the African Development Bank using bridge loans (which are equivalent to rescheduling Sudan’s debts), Sudan now has access to creditors, who can forgive or reduce its indebtedness under the International Monetary Fund’s HIPC initiative, then Sudan can reach the decision point, where it will have access to the necessary financing and aid to help in the development process, this can happen by obtaining soft loans from various international financial institutions and funds, including the International Monetary Fund, the World Bank and the African Development Bank.
In addition, after a maximum period of one year, Sudan can reach the completion point. After confirming the government’s commitment to the reform program, in the fund’s eyes, Sudan can begin negotiating a total or partial exemption from the interests and arrears of its debts, which exceed 80 percent of Sudan’s total external debt.
- Sudan returns to the international community
In addition to the economic gains, the Paris Summit included other non-economic profits, most noticeably, the support of the democratic transition process in Sudan and also the reintegration of Sudan into the international community after its name had been removed from list of countries sponsoring terrorism in December 2020.
For 30 years, Sudan had been forced away from the international arena and saw many restrictions imposed on it due to being on the list of states harboring terrorism. This led to the deterioration of Sudan’s economy.
2- Future challenges to Sudan’s economy
Despite the high hopes pinned on the results of the Paris conference to revive the Sudanese economy and Sudan receiving many pledges and economic and legislative programs, which were followed by the Sudanese government upon the request to do so made by the International Monetary Fund, alongside encouraging foreign investments in the country, Sudan still faces many challenges to benefit from all these results. Most notably, the states being committed to their pledges, since Sudan has been previously promised generous donations and aids in 2019 by major countries, yet these were never fully delivered on the agreed upon timings, which worsened the Sudanese economy even more.
On the other hand, the Sudanese economy suffers from many distortions and imbalances, alongside the deteriorating living conditions due to the high inflations, which reached 363 percent in April 2021, that’s 300 percent more since April 2020.
At this rate, the inflation in Sudan is becoming the second worst rate in the world after Venezuela; in spite of the economic reforms implemented by the government with the goal of reducing the inflation rate, in addition to the deterioration of the exchange rate since the government’s decision to liberalize it in February 2021, so that the exchange rate of one dollar exceeded 400 Sudanese pounds in the official market.
Sudan also faces an increase in the prices of basic commodities, and the lack of liquidity, the severe shortage of infrastructure and energy outputs as well as the repercussions of the coronavirus and the floods on the Sudanese economy.
Second- The Summit on Financing African Economies
The summit was held in an attempt to find innovative solutions to the major economic problems of African countries, which worsened after the coronavirus outbreak and negatively affected their efforts to achieve the desired development and settle their massive debts.
Held on 18 May, the summit saw the participation of some 30 African and European heads of state, including Egyptian President Abdel-Fattah Al-Sisi, Congolese President Felix Tshisekedi, who currently holds the chairmanship of the African Union, in addition to Musa Faki, the Chair of the African Union Commission, and the president of the African Development Bank, as well as representatives from the G20, G7, the European Union and heads of global financial institutions, such as the International Monetary Fund and the World Bank.
1- A busy schedule
Summit attendees participated in two sessions: the first on foreign financing and debt; and the second on private sector development, reforms and infrastructure to boost the African economy, and help it overcome the negative repercussions of the coronavirus.
The summit tackled the means to increase investments in African countries with the help on the private sector, European countries and international financing institutions and called for canceling or decreasing the debts of African countries, and providing them with coronavirus vaccines. It also discussed security issues and terrorism that threatens Africa, especially its coastal regions.
Moreover, the summit saw discussions about the challenges facing African countries when providing and financing vaccines, as well as discussing the issue of illegal immigration and the need to face it through the process of economic development.
It’s worth noting that the idea of the conference emerged after a report put out by the International Monetary Fund stated that Africa is at a risk of facing a financing deficit of $290 billion by 2023. Moreover, last year, Africa witnessed its first recession in 50 years by about 2.1 percent due to the coronavirus outbreak. The African Development Bank predicted that 39 million people may fall into poverty this year, alongside many African countries being at risk of debt distress due to the pandemic.
In April, it was decided to increase the reserves (special drawing rights) in the International Monetary Fund by $65 billion, and to extend the freezing of debt service to help developing countries deal with the pandemic.
Nevertheless, African will only benefit from the allocation of only $34 billion, while it is expected that $230 billion will be allocated to the G7 countries and China.
This encouraged Macron to try and persuade the rich countries, throughout the conference, to redirect their special drawing rights in the International Monetary Fund, so that the allocations to Africa can increase to $100 billion, in addition to him expressing the need to help Africa speed up its vaccination campaign. He also expressed that the international community should aim to vaccinate 40 percent of the African population by the end of 2021.
2- High hopes, small gains:
The most prominent results of the summit were the participating countries agreeing on the necessity to allocate a package of financial aid to create economic incentives, which are needed by the African continent, in addition to the agreement of trying to convince rich countries to reallocate $100 billion from the special drawing rights in the International Monetary Fund to African countries, by next October.
On the other hand, the closing statement of the summit explained the importance of forming a common vision to support the African continent through the coronavirus pandemic, while also speeding up the production of the pandemic-related medical technologies, such as vaccines, blood analysis, in addition to working on their equitable distribution throughout the continent.
During the summit, the participants agreed on the importance of formulating a common vision to support the African continent through the coronavirus pandemic, which includes resources from the private sector and initiatives to maximize the concessional financing available to the continent through international development institutions and donors at the bilateral level, while accelerating the production process of the pandemic related medical technologies, such as vaccines, analysis and also working on equally distributing them through the continent, and also discussing economic reforms that help support the sustainable development of African countries, including financing small or medium enterprises, and providing an investment climate, tax administration and support for entrepreneurship.
All of these gains seem modest, given the hopes made by many Africans about dropping the continent’s debts or even a part of them, in light of the tense economic situation forced by the outbreak of the coronavirus, especially since the general debt of the south Saharan Africa is expected to reach around $800 billion by 2022, which is equivalent to 42 percent of the region’s Gross Domestic Product (GDP), according to the International Monetary Fund’s predictions.
Despite the figure being high, it doesn’t represent even 0.25 percent of the global debt, which reaches a total of around $300 trillion, at a time where the United States’ general debt alone reaches 129 percent of the its GDP, therefore, Africa’s debts are not a big deal for the international community, yet it still represents an obstacle to the development of African countries, which need massive funding to build a real industry, but face difficulty resorting to external debts, due to their high cost.
Additionally, what alarms African countries the most is the urgent issue of vaccines and the fairness of their distribution, because the amount of support directed to the continent is less than its actual needs in a way that contributes to intensify the economic and social problems resulting from the pandemic, which forces many countries to delay the second vaccine dose for weeks, due to the shortage of vaccines available.
This highlights the importance of waiving intellectual property rights to enable African countries to locally produce vaccines, as an alternative to provide the required quantities, because a global recovery from the pandemic won’t happen without fairly distributing the vaccine among all countries, the recovery also depends on whether rich countries will share their technologies and also whether local enterprises can get enough funding to take over the task of producing millions of doses.
Macron was reported to have called upon Western countries to offer 13 million doses of coronavirus vaccines to African countries, during the meeting of the G7 in February 2021, because the unfair distribution of vaccines will reflect on French and European interests, according to Macron, as there are more than 10 million citizens with families on the other side of the Mediterranean.
Third- Strong Egyptian participation
President Abdel-Fattah Al-Sisi attended the summit. He presented his concerns and hopes for the African continent and his keenness to support Sudan regionally and internationally.
Egypt’s President and his French counterpart held a mini-summit at the Elysee Palace in the presence of King Abdullah II of Jordan via video conference. During this meeting, President Al-Sisi called upon the international community to intensify efforts to urge Israel to stop its violent escalation in the West Bank and the Gaza Strip, to allow for the restoration of calm and to provide the Palestinians with various types of support.
President Al-Sisi also clarified that there’s no way out of the vicious cycle of chronic violence without finding a radical, just and comprehensive solution that will lead to the establishment of a Palestinian state, where the Palestinians can enjoy all their legitimate rights like all other populations in the world.
He also announced that Egypt would provide $500 million to help reconstruct the Gaza Strip, due to the recent events, with Egyptian, specialised companies that will help in the reconstruction process.
The Grand Ethiopian Renaissance Dam (GERD), which is a vital issue to both the Egyptian and Sudanese sides, was discussed during the meeting between Al-Sisi and chairman of the Sudanese Sovereignty Council, Lieutenant General Abdel-Fattah Al-Burhan. The GERD was also the subject of discussion between President Al-Sisi and Macron and African leaders. President Al-Sisi affirmed Egypt’s position on the necessity of concluding a legally binding agreement on the rules for filling and operating GERD and reiterated Egypt’s rejection of Ethiopian unilateral measures that could negatively affect the security of the region.
Egypt’s prominent participation in the activities of the two Paris summits came due to the close relations between Cairo and Paris, Egypt’s prominent role in supporting Sudan, and also the consensus between most regional issues and files, starting with fighting terrorism in the coastal and Sahara region and the position in the Libyan file, as well as the convergence of views on the recent escalation in the occupied Palestinian territories.
In short, with the return of the French interest in the African continent, and the large number of issues raised at the Paris summits, African and Sudanese hopes have been renewed for international support to their economies that are suffering the repercussions of the coronavirus outbreak and need a Marshall Plan to save and rebuild them.
With the reassuring results and promises that have been made at the summit for many African economies, especially the Sudanese economy; it’s still within the framework that these promises will be fulfilled and the issue of the equitable distribution of vaccines will remain strongly present in all international forums that African parties will participate in, until all the international community understand the fact France has realized: no one survives alone.