The African Development Bank (AfDB) has given approval to an almost 5 billion rand ($300 million) loan to the South African government to support its economy and to enable it to fight the COVID-19 pandemic.
The loan, approved a few days back, falls under the Bank’s $10 billion COVID-19 Response Facility and will finance South Africa’s COVID-19 Support Program, representing the Bank’s first-ever budget support to S.A.
The operation is designed as a Crisis Response Budget Support Operation prepared following a request from the government of South Africa.
South Africa confirmed its first case of COVID-19 on 5 March 2020 and is currently the most affected in Africa, and among the top five in the world in terms of confirmed cases above 434,000 as of 26 July, with death toll above 6,655.
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The South Africa, which is the continent’s most industrialized economy had entered into recession even before COVID-19 began to ravage its economy with forecasts indicating that the GDP is expected to decline by below 7% this year while its budget deficit was around 15% of GDP
The AfDB affirmed in a statement that the loan was to protect the living souls and to promote access to essential medical equipment, to protect livelihoods by preserving jobs, and to support companies in both formal and informal economy.
Meanwhile, South African’s challenges remain in the public health sector, which has been under-funded and lacks adequate human resources. While the private health sector that is better equipped remains unaffordable for the majority of South Africans, especially the ones that live outside major cities.
In order to ensure a complementary intervention, AfDB operations were designed in collaboration with other partners, including the International Monetary Fund, World Bank, and the New Development Bank.
