Interview with Alain Le Roy on the summit on financing African economies

Emmanuel Macron at the summit on the financing of African economies on 18 May 2021 at the Elysée Palace surrounded by IMF Managing Director Kristalina Gueorguieva and Senegalese President Macky Sall (right) and Congolese President Félix Tshisekedi. ©LUDOVIC MARIN/POOL/AFP

Alain Boinet for Défis Humanitaires. On Tuesday 18 May, at the initiative of French President Emmanuel Macron, France hosted a summit dedicated to financing African economies to address the serious economic and social consequences of the pandemic and the sharp increase in debt. What was the objective of this summit and what were the main outcomes? There has been a lot of talk about special drawing rights (SDRs). For our readers, in order to measure the interest, could you detail this mechanism and the expected impact?

Alain Le Roy. The main objective of this summit was indeed to respond to the very strong impact of the pandemic on African economies. While Africa had experienced strong and sustained growth over the past 25 years, it experienced a 1.9% recession in 2020 and its growth prospects for 2021 are, according to the IMF, of the order of half the world growth rate. There was therefore an urgent need for action, particularly to reduce the number of people at risk of falling into extreme poverty.

Our basic finding was this. While the economic impact of the pandemic was very strong everywhere, some continents had instruments at their disposal that enabled them to carry out rapid and massive recovery plans; this was true for Europe, thanks in particular to the role of the European Central Bank and its very strong asset purchase policy, which enabled recovery plans in Europe totalling several hundred billion euros. This was also true for the United States, where the monetary policy of the Federal Reserve System (FED) enabled the US government to implement stimulus packages totalling more than 2000 billion.
Africa, however, does not have equivalent instruments and in particular no continental central bank.
Hence the idea of using the IMF and Special Drawing Rights (SDRs) as another way of injecting liquidity into the economy, this time for the benefit of all countries. SDRs are foreign exchange instruments that feed into the balance of payments and thus allow the countries concerned to finance their imports.

This is admittedly a bit technical, but the main point is that, faced with the impact of the pandemic, the international community has agreed on a new allocation of SDRs of up to 650 billion dollars for IMF member countries. This allocation, which will be legally decided by the IMF Board in June, will allow African countries to receive $33 billion directly from September 2021.

And the countries present at the summit agreed that, on a voluntary basis, a significant share of the SDRs accruing to advanced countries would also benefit African countries, through various mechanisms currently being developed, including zero-interest loans.

President Macron has indicated that we are working to ensure that the sum of SDRs that will benefit Africa reaches at least $100 billion.
This is in addition to the impact of the debt relief that is being implemented in the G20 and the Paris Club, as well as the upcoming replenishment of IDA (the World Bank’s window for low-income countries).

DH. Were all the strategic players present at the summit?

Alain Le Roy. Yes, without a doubt. Because of Covid, we were not able to invite all 54 African heads of state, but almost all the African heads of state we had invited were present in Paris on 18 May for the summit; in particular, there were the Presidents of South Africa, Senegal, Rwanda, Ghana, Côte d’Ivoire, Nigeria, Egypt and many others, twenty-two in total, as well as the President of the European Council, the President of the European Commission and several European heads of government. In addition, the Prime Ministers of Japan and Canada participated by video, the United States, through the Secretary of the Treasury, Janet Yellen, the Chinese First Vice Prime Minister Han Zheng, and many other leaders. Also present in Paris were of course the Managing Director of the IMF, the Managing Director of the World Bank, the Secretary General of the OECD, the Director General of the WTO and many other leaders of financial institutions.

All the countries that participated in the summit approved the final declaration of the summit, which can be found on the Elysée website (elysee.fr, under agenda 18 May); this declaration is admittedly very technical, but it does list the various advances made during the summit.

Summit on the financing of African economies, 18 May 2021, Elysée Palace. Judith Litvine, MEAE

DH. The Franco-Ivorian financier Tidjane Thiam declared that the development of Africa was first and foremost the business of Africans, that Africa was not asking for any favours and the President of Senegal, Macky Sall, added that it was necessary to move from a logic of assistance to a dynamic of co-construction. On the African side, what are the essential ingredients of a winning “New Deal”?

Alain Le Roy. The summit did indeed conclude that there was a need for a massive stimulus, to be financed in particular by SDRs, as I have just mentioned, to deal with the exceptional crisis caused by the pandemic, and for strong support for Africa’s main endogenous growth factor, i.e. its very dynamic private sector. During the summit, an Alliance for African Entrepreneurship was launched, an initiative designed to bring together all public and private efforts to strengthen the financing of the African private sector. It is the private sector that will ensure sustainable growth in Africa now and in the medium and long term by attracting a larger share of the abundant international private flows. To this end, the summit made it possible to make progress in the risk-sharing instruments that the international financial institutions are putting in place so that the interest rates of the financing to which African countries have recourse can be significantly reduced.

DH. Another objective of the Summit was the vaccination of African populations, which is still low, even if the number of infected people is fortunately very low. What is the status of the so-called ACT accelerator mechanism and its Covax facility that is to address this? There was also the issue of vaccine production in Africa and the removal of intellectual property constraints. What has been achieved in this area?

Alain Le Roy. This is obviously an emergency that everyone recalled during the summit. The Covax facility, which France initiated with the European Commission, should make it possible to vaccinate 20% of the African population by the end of 2021. With the AVATT facility created by the African Union, the vaccination rate should reach 30% by the end of the year. And we are currently examining various solutions to achieve an immunisation rate of 40% by the end of 2021 and 60% by mid-2022.

And France also strongly supports the initiatives underway to develop vaccine production in Africa. President Macron has just discussed the implementation of this initiative with his counterparts during his trip to South Africa and Rwanda. As for the discussion on the suspension, on an exceptional basis, of intellectual property rights, it is underway at the WTO, but a consensus has not yet been reached.

Mali began its Covid-19 vaccination programme with Health Minister Fanta Siby ©UNICEF/Seyba Keïta

DH. Another part of the Summit was devoted to supporting the private sector, especially SMEs and VSEs, in order to stimulate internal growth and create millions of jobs in the face of the demographic explosion. Was there any real progress in this crucial area?

Alain Le Roy. Yes, clearly. Firstly, by putting this subject at the heart of the summit, as it is essential for the creation of jobs for the very large number of young people in Africa. Then by launching this Alliance for Entrepreneurship in Africa, which can already mobilise a billion dollars, thanks to the support of the IFC (the World Bank’s private sector subsidiary), to invest in the African private sector both in terms of equity and loans. And the European Commission is now also developing important new instruments, with associated funding, to improve the financing of this sector which until now has had great difficulty in finding local funding. This includes increasing the number of venture capitalists, helping to strengthen local banks and African funds, so that finance reaches even the smallest companies. The movement is now well underway.

DH. In addition to macro-economic decisions involving billions of dollars, what is the added value of humanitarian and/or development NGOs given their proximity to the most vulnerable populations, their experience and their long-term commitment?

Alain Le Roy. This summit, which brought together heads of state and leaders of international organisations, was naturally interested in global, macro-economic solutions, given Africa’s very significant current financing needs; the IMF estimates them at nearly 300 billion dollars by 2025. And of course only the heads of state can decide on the allocation of SDRs in the appropriate amounts

But it is clear that there is a need for actors on the ground to ensure that this indispensable global funding ultimately benefits the local populations that need it most. And for this, the role of humanitarian and/or development NGOs is essential, in the long term, to complement the role of public development agencies such as AFD. There is an obvious complementarity between the efforts of States interested in the development of Africa and the efforts of NGOs which ensure the effective relay on the ground and can reach the most vulnerable populations.

DH. Some commentators suggest that there was no firm commitment from all the participants at this Summit and that the President of the Republic, Emmanuel Macron, was now hoping for a political “agreement” at the next G7 or G20. What do you think of the situation, since you prepared and participated in the Paris Summit from start to finish?

Alain Le Roy. There were a lot of firm commitments during the summit, you only have to read the final declaration of the summit, adopted by all the participating countries. But it is true that we would have liked to see a precise figure in the declaration on the amount of SDRs that the advanced countries will reallocate to African countries. President Macron said during the press conference following the summit that we wanted at least $100 billion to reach Africa from the allocation of SDRs, in addition to the tens of billions that the IDA replenishment will bring.

This figure could not be included in the statement because several countries, such as the US, cannot make a legal commitment until the SDR 650 billion allocation has been formally voted on by the IMF Board. This vote will take place in June, which is why the reallocation figures will only be made public in October, at the G20 meeting, with the associated mechanisms that we are working on.

DH. By way of conclusion, what would you like to add?

Alain Le Roy. That this summit, despite all the progress that has been made, is obviously only one stage in the process of giving Africa the means to ensure its long-term growth and to achieve the sustainable development objectives. This year’s forthcoming G7, G20 and COP26 meetings must also contribute to this.

In any case, it was very important to get all the main global players, Africans, Europeans, Americans, Canadians, Chinese, Japanese, etc., around the same table and to commit to greater solidarity with the African continent on the one hand, and to work within a multilateral framework to concretely reduce the divergences between African economies and those of the most advanced countries on the other.

In Goma, Democratic Republic of Congo, people flee under the fire of the Nyiragongo volcano, 27 May 2021. ©GUERCHOM NDEBO / AFP

More information :

Summit on the Financing of African Economies – Final Statement

Who is Alain Le Roy ?

Alain Le Roy is Ambassador of France and Honorary Senior Advisor to the Court of Auditors. He has been Ambassador of France to Madagascar and Italy, as well as Under-Secretary-General of the United Nations, in charge of peacekeeping operations, and Secretary General of the European External Action Service.

French Generosity, cuvée 2020, bubble or no bubble?

One year, “already”, but what a long and heavy year it has been. For some of us it has been dramatic. Bereavements, illness, the impact of the economic and social crisis with consequences that are still difficult to estimate.

And in this slump, the generosity of the French continues to grow, as it does during each humanitarian, climatic or health disaster.

In April 2020, I put forward the hypothesis of a bubble of generosity, as with every disaster, with a singularity: unlike tsunamis, earthquakes or other consequences of conflicts, this crisis also affects the whole population, including the one that usually donates. Would the latter behave as usual or would they withdraw, considering that it was up to the public authorities to take on such a challenge?

Well, it has to be said that a bubble of generosity has formed and that the French have mobilised themselves vigorously. The first indicators show a 20% growth in generosity from the general public (vs. -10% of GDP) and we are waiting for the figures from corporate sponsorship, which should not be outdone.

We still need to refine these figures and take a closer look at where this generosity has gone?

Logically enough, we might have thought that donations would be concentrated, “selfishly”, towards structures in the health and medical research sector, at the heart of the fight against the pandemic, which are able to help us.

But this is not the case. We were able to identify three circles of beneficiaries with varying degrees of resources.

The first circle, as seen above, is all the causes linked to the fight against Covid.

A second circle concerns organisations that help vulnerable and fragile populations, such as Secours Populaire, Secours Catholique, Emmaüs, the French Red Cross and the Salvation Army, to which should be added the NGOs that intervene abroad, such as MSF, MDM, ACF and HI.

This is one of the main characteristics of French and European (or at least continental) generosity, unlike the powerful American philanthropy, which gives mainly to causes that benefit its own donors.

Finally, a third circle, which concerns cultural organisations, heritage protection or various sporting activities that have been hit hard by this epidemic, has received little support because they are far removed from the concerns of the French during this period.

As in every crisis, there are winners and losers, and the organisations that suffer the most are those that are not very well known or that do not have a great capacity to solicit donors.

This bubble is also the result of the incredible inventiveness and vivacity of organisations of all sizes to solicit the generosity of the French. To traditional fundraising methods have been added innovative forms such as gaming, online auctions and solidarity lotteries, which have flourished with impressive success.

5th edition of the Z Event to benefit Amnesty International in October 2020. The event was a success with more than 50 hours of streaming and 5,724,377 euros raised.

The explosion of these initiatives is helped by the digitalisation of fundraising and payment methods.

If at the end of 2019, we were worried about the weak rebound of digital donations over the last two or three years, with a growth rate of more than 230%, the transfer to this vector of generosity has finally happened and we will not go back.

Civil society has shown great resilience. I mentioned Seneca in a recent editorial in the CerPhi news letter. I recalled that the philosopher had developed, in seven books, a Stoic analysis of the notions of ethics, gratitude, ingratitude and beneficence, and offered numerous tips for granting, receiving and returning benefits appropriately.

But his point is to assert the necessity of gratitude and benevolence, which for him are the most powerful bonds in human society.

In this time of pandemic and the incredible rupture that such a crisis constitutes, the need for gratitude and benevolence becomes a categorical imperative.

The Telethon 2020 raffle raised €2,175,850 with Stars Solidaires.

As we emerge from this crisis, which we hope will soon be over, how will the generosity of French companies and households evolve?

This year, which has seen half of the world’s population living at the rhythm of stop-and-go sequences, will impact our societies for a long time to come, on an economic, social, political and even geopolitical level.

The consequences are not yet fully known and very clear, but we cannot ignore this reality for long and go on as if nothing had happened.

A few economic sectors seem to be flying over this disaster. The world’s stock markets are back to their February 2020 levels and everything seems to be going well in the best of all possible worlds.

This disconnection between finance and the real economy, which has been denounced by many, adds to the obscene nature of the situation. Many sectors of the economy are on their knees and the stock markets are once again flying from record to record on the mountain of debt that countries are accumulating to avoid another global crash and that will have to be repaid year after year.

The philanthropic sector has also been spared by this crisis for the time being, but it is emerging ever stronger, as it does in the case of any major crisis or humanitarian disaster, given the explosion in social needs and the ever greater need to express generosity.

For the general public, its main contributors are senior citizens, the vast majority of whom are retired, who, having received their pensions as they do every month, are convinced that their savings are still protected and continue their unfailing support for associations and foundations.

On the large philanthropy side, donors who are part of the 1% who hold 50% of the wealth of all humanity, continue their philanthropic commitment, because they understand that their absence from the bedside of the most disadvantaged could come back to them in a boomerang.

The future of philanthropy may look bright, but there are some warning signs.

On the corporate side, despite the underlying trend of philanthropy, CSR and “good”, the economic sector, confronted with multiple challenges, is at risk of muffling its societal commitments.
As for large-scale philanthropy, the taxation of the highest incomes and assets is almost inevitable, which could lead to the defection of certain high taxpayers, who consider that their tax is already a significant contribution to the general interest.
Finally, will the general public resist for long if their savings and income collapse as the crisis worsens?

Let’s not play the Cassandra and bet on a positive outcome for the whole sector.

Antoine Vaccaro, President of CerPhi

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Who is Antoine Vaccaro ?

Antoine Vaccaro holds a doctorate in organisational science – Management of non-market economies, Paris-Dauphine, 1985.

After a professional career in large non-governmental organisations and communication groups: Fondation de France, Médecins du Monde, TBWA; he chairs the CerPhi (Centre for Study and Research on Philanthropy) Force For Good and the Fund-raising Lab. He holds various volunteer positions within associations and foundations and is also co-founder of several professional organisations promoting private funding of general interest causes: “Association Française des fundraisers, Comité de la charte de déontologie des organismes faisant appel à la générosité publique, Euconsult, La chaire de Philanthropie de l’Essec, 2011”.

He has published various books and articles on philanthropy and fund-raising.