news - Linda Broekhuizen on the need to keep investing in Africa (Dutch Radio 1)

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Linda Broekhuizen on the need to keep investing in Africa (Dutch Radio 1)

May 12, 2020

This morning, our Chief Investment Officer Linda Broekhuizen was a guest in the Dutch radio program Radio 1 Journaal, on NPO Radio 1. A daily morning show that covers news, background, analysis, and sports. 

Reason to invite her was the recent advice of the International Affairs Advisory Council to the Dutch government to allocate 1 billion euros extra for developing countries, focused on the private sector. Broekhuizen was asked to share her vision on the current financial situation in Africa and how to handle this.

To listen to the broadcast (in Dutch), click here.

Translation

What are the impacts of Corona in Africa so far?

"For the time being, the curves for Corona seem flat in Africa. However, the financial-economic effects are tremendous. We see a capital outflow, which is larger than the crisis in 2008.

We see the impact of lower oil prices in countries like Nigeria, Ghana, Mozambique. The commodity prices have dropped which will have its impact on exporting economies. Due to the lockdown many people are forced to stay at home, which affects entrepreneurs and SME’s.

All FMO clients I've talked to say that the poorest people are hit the hardest. Most people only have one or two months of savings, which makes it hard to buy food in the long run, which can lead to a food crisis."

How much money is needed?

"It is important to distinguish between public and private means. Overall, you hear a cry for (temporary) debt relief for these countries. This is a topic that is discussed amongst the Ministers of Finance of the G20, in which the Dutch government takes part. The IMF has provided 18 billion, the World Bank provided 12 billion. At the same time, the private sector, which provides around 90% of the jobs in these countries have not been provided for yet.

With our customers we are in the veins of the local economies and provide for many jobs. Therefore it is very important to help the private sector with additional liquidity to survive the upcoming months to make sure people will keep their jobs and we can prevent unemployment and famine."

In Europe, we see that countries are divided in their response to the Corona pandemic. How great is the willingness to invest in Africa?

"It is important not only to focus on the short term, but also on the long term. In Africa there are 54 countries with 1,2 billion inhabitants. The population continues to grow towards 2 billion.

African economies are of great importance to Europe. Not only because of the migration that can increase when unemployment increases, but also as a market for European and Dutch companies. The SDGs have set a clear agenda for 2030. It is very important to address these in an integrated way and to create a joint agenda as European countries in which The Netherlands take part."