A ‘New Deal’ worth $7.1 trillion is the only pathway to reviving Africa’s economy that has taken a downward spiral since the outbreak of COVID-19, says the Economic Commission for Africa (ECA).

ECA Executive Secretary Antonio Pedro made this disclosure at the ongoing African Economic Conference (AEC) to chart a new path for Africa’s post-COVID-19 economic recovery.

He likened the proposed deal to a similar deal by the U.S. between 1933 and 1939 during the presidency of Franklin Roosevelt.

He pointed out that the American deal then was worth $41.7 billion, an amount which he said now equalled $653 billion.

Mr Pedro said that the new deal for Africa would form part of the external funds required by Africa to, among other things, address the rising risk of African debt defaults amid the Covid-19 pandemic.

“On the external front, Africa needs a new deal to recover from the ravages of the pandemic. Roosevelt’s New Deal cost $41.7 billion at the time it was instituted.

“Given Africa’s current population of 1.37 billion, a New Deal would have to deliver $7.1 trillion in financing to equate the U.S. New Deal on a per capita basis.

“The resources required to finance a New Deal are enormous and cannot be funded exclusively through public resources. Private funding will be critical.

“Yet we are all aware the cost of private financing is high. At the same time, private direct capital investments are motivated more by economic rates of return than by social welfare considerations.

“Blending public financing with private resources can redirect more private investments and financing to social and other orphaned sectors through risk-sharing and risk mitigation,” he said.

He said that the ECA had partnered to launch the Liquidity and Sustainability Facility (LSF) at the margins of COP26 to lower the cost of portfolio investments in emerging markets and crowd in a new class of investors into the continent.

He said that the LSF seeks to use on-lent SDRs to leverage private financing by making it possible for holders of African sovereign bonds to access short term financing using such instruments as collateral.