Felwine Sarr: The COVID-19 crisis demonstrates the need to change track and re-think the world of tomorrow.

An interview with Professor Felwine Sarr, Professor of Economics at the Université Gaston Berger of Saint-Louis in Senegal, for INET’s series on COVID-19 and Africa

Lisez cet article en français ici.

Professor Felwine Sarr, Professor of Economics at the Université Gaston Berger of Saint-Louis in Senegal, reviews the impact of the Covid-19 crisis in Senegal, and the work carried out by the working group that led to the elaboration of the Senegalese economic and social resilience plan launched by President Macky Sall. Pr Sarr also provides a critical analysis on the issue of African debt and the urgent need to rethink economic and development models in Africa.

Interview carried out by Folashadé Soulé and Camilla Toulmin

Senegal was one of the first countries to react quickly to their first positive COVID-19 case in March 2020, and without putting a strict lockdown in place. What is your analysis of the policy measures designed and put in place by the government, especially given the current growth in the number of cases?

Prof Felwine Sarr: I think that Senegal chose to apply those measures which made sense for the situation it faced then. A strict lockdown would have shut down the whole economy, and had an impact especially on the 97% of enterprises making up the informal sector. The large majority of people in this sector make their living from day-to-day trading and transactions, so it would have been hugely damaging to the productive economy to shut this down, especially with the relatively small number of cases then present. The decision taken, which was an intelligent choice, was to constrain non-essential activity. There had been some large religious gatherings planned in early March, which the government banned. The sectors most affected have been tourism, transport, restaurants and cafés, and the informal economy. Having taken specific measures, the government decided not to put the country into lockdown, but to reduce activities to a minimum, shut schools and universities, and to manage the situation as it evolved. So far as the economic question is concerned, the Minister for the Economy undertook a joint analysis with the help of many Senegalese economists to think about an economic recovery plan – and I’ll come back to that later. Over the first two months of the crisis, the measures taken seem to have worked. Currently the number of cases has been going up, but this is most likely a result of the growth in tests being done. On average, we get around 10% of positive results from the tests done. With 200 tests, we had 20 cases, with 1300-1500 tests, we got 130 new cases. The larger the number of tests, the better we can gauge the actual number of cases. It seems as though there are a lot of asymptomatic cases, and perhaps we’re dealing with a branch of the virus which is not as lethal as elsewhere. We’re waiting for the scientists to confirm if this is true. As for the measures being taken today, which are easing the restrictions at a time when the number of cases is increasing, I am not convinced that this is the right choice to make.

Why do you consider that the loosening of restrictions being taken today are not the right way to go?

Prof Felwine Sarr: We are currently in a very delicate situation. Yes, the numbers are going up but not exponentially. Nor is there a big growth in the number of deaths. When you compare COVID deaths with the number who die from other diseases or from road accidents, its not a huge number. In this context, and after three months, it is difficult to maintain this strong focus on prevention, and keep people away from their normal activity. It goes against the grain of everyday life, and you can see the result in fewer people wearing masks and abiding by social distancing rules. After a certain time, the flow of life and activity takes up again, and we need to respond to that most effectively. Several religious leaders have successfully pressed the government to allow the re-opening of places of worship, which I don’t think they should have. That said, the churches and a number of big mosques in Dakar have kept their doors shut. The great Massalikoul Djinâne mosque, which covers a very large area, has been able to reconfigure its prayer-hall to ensure people stay one metre apart. But many of the smaller neighbourhood mosques don’t have the room, and people find themselves very close together. So in this case, the government has sent a contradictory message by re-opening places of worship, and schools. They continue to demand that people respect the rules and keep their distance, but I get the sense that there has been a significant change in attitude and behaviour, with people feeling able to relax the rules. I don’t think it is the right time to release the pressure, though its true that this is a process of government “learning by doing” without the certainty and with a strategy of steering the ship as the context changes. Somehow, we need to maintain the rigour in applying the rules while re-opening the economy in an organised fashion.

You are a member of the committee put in place by President Macky Sall to develop the economic and social resilience plan. Can you tell us about the plan, what economic measures are being considered in the Plan Emergent Sénégal (PES) post-COVID to respond to the economic consequences of the pandemic?

Prof Felwine Sarr : From the start of the COVID crisis, a number of fellow economists got together and decided they must think through the economic impact of the COVID-19 crisis and the right measures needed to address this. We created a working group, making sure that its composition properly represented the disciplines and expertise needed to cover the many questions generated by the crisis. The Minister of Economy agreed to meet us, and we offered our help to work with his team, which he accepted. We were able to make rapid progress with the work because we had access to all the necessary information, and good collaboration with his staff. I welcome this initiative because I get the impression that civil society, and the academic world, could really bring practical value to understanding and addressing this crisis. It has been very effective, avoided long administrative procedures, and brought real expertise to contribute to the government’s responses. I find it excellent that the Minister of Economy accepted this collaboration, and that many of our proposals have been adopted in the national resilience plan. These included a range of issues : first particular attention to those sectors most affected by the crisis – tourism, transport, trade, restaurants and other eating places; fiscal measures to provide a tax credit for businesses; a state contribution to unemployment pay in order to help businesses keep hold of their employees; and a ban on laying off staff for three months. The second major axis addressed the most vulnerable households: Senegal already had a social safety net system covering 580,000 of those households considered most vulnerable, remembering that each household has an estimated 8 to 10 people. The idea was to expand the target group of those most vulnerable to 1 million households, which brings in around 10 million people out of a total population of 16 million, and to provide either urgent food distribution, or a cash transfer. So there were two options – financial help, or food aid. We assumed a daily basket of basic foodstuffs which provides 2100 kcals per day, made up of various products. For the cash transfer, we reckoned on a sum which was equivalent to around 60% of need. In the end, we went for the food distribution, since it was more likely that household members would actually get to eat this food, and would avoid the risk of the household head using the cash sum for other less immediate purposes. We also asked ourselves whether the markets would stay open, whether certain products might run out, or the risks run by people congregating in these areas for shopping. The answer we came up with was to go for targeting, using a process well-established by the government. This was reasonably well-carried out, despite questions around the transport of goods and procurement of grain – in essence, it seems that those households most in need did receive the food. The third area looked at concerned those people working in the informal sector. Remember this is a sector for which data lacks, so we had to ask ourselves how best to reach those most affected. Through cash transfers to households in the third income quintile and those reliant on migrant remittances, we could reach them. One of the final questions was to think through how to maintain people working in this sector, and ensure that their activities did not disappear once the crisis had passed. One path would be to use state procurement to source from this sector.

Once the state had put this plan in place, the next question put to the minister was how to prepare for recovery post-crisis. For this, we discussed options with his team and came up with a plan to re-orient and re-structure the economy. Our founding principle has been to avoid going back to the former pattern of growth, because the crisis has made evident the country’s vulnerability to food security, reliance on primary production, lack of autonomy, weak human capital, as well as weaknesses in those sectors which should be truly strategic: such as pharmaceutical drugs, and agriculture. How can we « profit » from the opportunity presented by this crisis to re-think the structure of our economy? Let’s re-think how we produce, patterns of growth, distribution of wealth, notions of value, etc. The minister was keen on these ideas and our taskforce has been undertaking a profound reflection on what would make our economy more resilient, more autonomous, responding to fundamental needs, and nourishing life itself.

Here we are today, with the rainy season beginning, and lockdown measures in place. There could be a risk that many young migrants in the city would be stopped from going back to rural areas in order to protect farming populations from the pandemic. At the same time, farming families need all their workers to get the agricultural season underway. How should these risks be managed?

Prof Felwine Sarr : Of Senegal’s 45 departments, 23 have not been touched by the pandemic, mainly rural areas. The government wants to keep this part of the country safe, by banning transport between major cities. President Macky Sall in his latest speech announced they were thinking of lifting this ban on inter-city transport, to enable people to return to cultivate their family land. And in the last week, this ban has indeed been lifted. We are on the look-out for two dangers: the first is making sure that people can prepare properly for the farming season; before it starts, you need to make sure that seed and fertiliser have been distributed. I am not sure right now where we are with preparing for the farming season, but I know the Minister of Agriculture is concerned that all preparations be made. We have a second worry about the possible arrival of locusts from East Africa, from Ethiopia above all, and their anticipated arrival in West Africa. A locust threat has been announced and measures should be taken to avoid them crossing the Sahara Desert and arriving here. Equally, the rainfall forecasts for this year are not very promising. So we face three challenges: effective preparation for the farming season, likely poor rainfall, and the locust threat. A number of ministers are working together to agree the measures needed.

Senegal relies on significant imports of rice: trade flows have been disrupted and a number of commentators predict there will be a major impact on importing nations. Has there been an increase in the price of rice and other cereals in Dakar, and Senegal more broadly?

Prof Felwine Sarr : In Senegal, we have prepared in order to avoid such a shortage. We are currently eating what we produced last year. In terms of what’s on the market, there is no apparent scarcity, but there is always the risk that other countries will engineer an artificial shortage to push up prices. We’ve been holding meetings with neighbouring countries to avoid “free-riders” and make sure some people don’t profit from this crisis through speculation. At present, there doesn’t seem to be a problem. My worry is for next year, given that grain harvests are likely to fall around the world, following this crisis. I think Senegal needs around 2m tons of rice per year, of which 1.1m tons are produced domestically, part of which is exported. There are a number of issues: we have a programme to speed up production and reach self-sufficiency in rice. Local rice production has grown a lot in recent years, but it seems that however much we expand domestic production, a significant part of this is exported and not consumed at home. Several reasons are put forward for why this is: the quality of the rice, the fact that it is not “twice-broken” and that the food habits of the Senegalese are to prefer Vietnamese rice which has been broken twice. We need to change people’s food preferences to eat more rice from the Senegal River Valley and Casamance. I think we should restrict imports of certain food products in order to stimulate local production and distribution, as we already have in place for several months to cover onions and tomatoes, so local consumers are forced to buy local foodstuffs. We need to take decisions of this sort in a number of strategic sectors. For grains, we expect the difficulties next year.

There are mixed views on debt cancellation, both amongst African governments and between the different creditors. Some countries like Senegal are asking for the cancellation of debt, others want a moratorium, and yet others like Benin want neither one nor the other. What is your view of this issue? And putting debt on one side, what other financial instruments might African governments use given the very tight fiscal space within which they find themselves?

Prof Felwine Sarr : Let’s remember certain basic facts of history: in the 1980s and 90s, African countries became very heavily indebted with ratios of debt/GDP which approached 100%. During the 1970s, they had benefited from the recycling of petro-dollars and better commodity prices. But it became clear that the industrialisation strategies that many countries were pursuing were “white elephants” of low value. With the subsequent fall in commodity prices, many countries found themselves in a debt crisis. There was a big movement to get debt cancellation, with initiatives such as the Highly Indebted Poor Country programme (HIPC), and the Gleneagles summit for debt cancellation in 2005. As a result of these initiatives, most African countries were able to return to sustainable levels of debt to GDP. Senegal for example has a ratio of 20% for debt/GDP. Following such a major effort between creditors and donor governments, the question was raised – how to prevent us finding ourselves in the same situation in 10-15 years’ time? This question must address the structural reasons for such debt. Those who are seeking debt cancellation are putting forward a number of arguments. Economic reasons include: the heavy weight of debt service obligations on government budgets, which is returned to the creditor instead of being invested in schools and health. There were ethical and moral arguments about the “odious” nature of this debt, and that Africa owes nothing because her resources are sold at such low prices globally. There have also been technical arguments put forward. The situation today shows the ratio of debt to GDP for Africa as a whole is 60%, which is broadly sustainable, and less than France at 110%, Japan at 200% and the USA at 108%. African debt is less than 0.3% of world debt, which means it is really negligible. Those pushing debt cancellation use this last point in particular. But it seems a very short-term position to take, specific to today’s situation but without a solution to longer term questions of economic sustainability. It is also costly in terms of the message it gives.

Personally, I am against debt cancellation for a number of reasons. First, it puts us in a fatalistic position of being unable to pay our debts; we take out a loan and when it falls due, we say urbi et orbi we’re not able to pay and demand that it be cancelled. I find it lacking in self-respect, given the commitments we have taken out, most of which (apart from China) are at preferential rates. If you take out a loan, it should be to invest in your economy so that it grows and generates resources that will allow you subsequently to repay the loan. It is your future income which you’re bringing forward to the present time. When an entity provides you with a service by offering liquidity today in exchange for payment later for future revenue, it is for you to make good this bet on the future. These repeated calls for debt cancellation avoid us asking important questions about how the money has been used, the use of our own resources and how to mobilise finance domestically. For me, if Africa really wants to take itself in hand and exit from a subordinate position, relying on compassion and pity, and instead seek to address the challenges, the continent must put itself forward as an equal, in so far as its possible, and take on its responsibilities.

Besides, the argument about debt being odious no longer applies. Certainly, there are asymmetric economic relations with the rest of the world, which we should push back on. We ought to refuse to sell our raw materials at absurdly low prices, and refuse to sign contracts for exploiting our natural resources which provide such a low share of the wealth they generate. These are power imbalances which we must tackle, but we should not address them through the debt question. We need to face up to them in their proper context, where they are evident. If you don’t repay your debts, the interest rate goes up, your ranking in the markets is impacted and you send out a signal that your word and commitment are not to be believed. This is especially important because in recent years a large part is private debt. If the level of debt is broadly sustainable, I don’t know why we should seek cancellation. African debt has become a totem, a symbol of some great burden that Africa has to carry for ever. “Africa is weighed down utterly and can never find a way out” has become the mantra. No-one looks properly at how things have changed and where we are today. We have only to mention African debt and compassion oozes out in all directions…with the voice of the good Samaritan heard everywhere.

But currently, we’re really not in such a bad situation. Granted, across the continent it’s a mixed picture – take the two giants, Nigeria has a ratio of debt/GDP of 15% and South Africa its around 55%. Angola has a ratio of 90% and Tanzania 71.8%. In these circumstances, I don’t see why we are calling for cancelling all African debt. It would be better to take individual countries and address their specific circumstances. Some have significant private sector debt and are keen not to see their credit rankings suffer, so they can continue to raise money on reasonable terms. For others, the situation is different – we need specific treatments, not blanket coverage. We must also focus attention on mobilising more substantial domestic resources, and ensure they can be put to use in financing our own economic growth, enlarging the fiscal base. For example, there are significant fiscal resources linked to land and property which we have not tapped, and much unpaid urban residential tax. A lot of work needs to be done to mobilise domestic resources on the one hand, and on the other stem illicit financial flows out of the country, such as via multinational companies which do not pay their taxes, and make sure we invest our money productively. These structural measures need to be put in place.

Sub-Saharan Africa, along with China perhaps, will be the only regions of the world in which there is a positive rate of growth, despite this being insufficient. Let’s not be alarmist. Each year, organisations flag catastrophes which don’t in fact eventuate; it’s a means to raise funds which they claim will prevent such a disaster occurring. The African continent has great strengths and resources with which to address its challenges. In holding out our hand, at a time when we don’t really need help, we lose the important symbolic benefit of having shown we’re trying our best. I am not against international solidarity, but it needs to be mobilised with self-respect and dignity. There are countries in Europe and Asia who are thinking of mutualising their debt – we should think about how we as Africans can develop such a mutualisation of our resources, and build solidarity in the face of common challenges – but this is very different from calling for debt cancellation. Our Central Banks have an important role to play in financing our economic development, the volume of funds injected so far for the COVID-19 crisis could be significantly increased.

A good number of analysts agree that this pandemic provides a valuable opportunity for African countries to re-think their development models, accelerate regional integration, diversify the economy, pursue greener growth…. Do you also think we’re really at an economic turning-point for the continent, and what pathways and direction would you propose?

Prof Felwine Sarr : I have already laid out my views about the need for a radical change in economic model for Africa’s development in my book « Afrotopia », involving deconstruction and reinvention of development as a concept. In the African context, I felt quite alone in taking this path. Then, Kako Nubukpo wrote an important book « L’Urgence africaine » in which he advocates a change in economic model. Our voices were thought at the time to be rather utopian, with few concrete measures that could be taken forward in our neo-liberal world, where we needed to integrate into global supply chains. Its been really interesting to see how these ideas have now become mainstream thinking over the last 3 months in Africa, and everywhere else. We have rarely heard so many people in social and intellectual circles express the desire for building a new and different world. Why? Because most of those dreaming of a better world have been witness to an historic experience – we have all seen how for 3 months, the capitalist juggernaut could be halted. We’ve seen global industrial production fall by 80%, pollution levels in cities like Beijing have dramatically fallen, rivers have been re-born in a clean state, the inexorable march of global capitalism has ground to a halt, and we have come to recognise the enormous and fundamental value of many jobs in the caring professions. We have come to see that some parts of the economy are essential, others are not. These are not abstract ideas, they are lived realities for us all. Those who see this as a turning point are right, because at this moment there is an opening in a historic process when a range of different pathways open up. That’s not to say that this opening will shut down, that these different pathways will win out, but yes – this is absolutely a time which must be seized. There are moments in every country’s history which are much more propitious than others. This crisis shows up those things which cannot last, and demonstrates the need to change, and construct a different kind of world. The African continent has all the potential to be self-sufficient in food, but cannot exercise ownership over the many resources which are exported. African leaders need to learn lessons from this crisis and that now is the time to construct an economy which serves the needs of their own populations above all. A further question concerns how to translate our collective intelligence as regards the theory into practical measures which transform society. These are the questions we as African economists and academics need to work on. Theoretical analysis is in vain if it cannot be translated into practical detail. How might we inject this intellectual added value into social mobilisation which leads to a real change in how our politicians govern us? This is a field in which people need to redefine politics in a way which allows citizens to re-discover their energy and capacity to shape their destiny. This is the battle for now, today. Who should do it, and by what means? Together we must find the answers urgently.

Felwine Sarr has published several books, the latest of which: Afrotopia (Philippe Rey 2016), Habiter le Monde (Mémoire d’Encrier 2017), Ecrire l’Afrique-monde (co-edited volume with Achille Mbembé, Philippe Rey 2017), Restituer le patrimoine Africain (Philippe Rey/Seuil) with Benedicte Savoy et Politique des Temps (co-edited volume with Achille Mbembé, Philippe Rey 2019).

About the COVID-19 and Africa series: a series of conversations conducted by Dr. Folashadé Soulé and Dr. Camilla Toulmin with African/Africa-based economists and experts about their perspectives on economic transformation and how the COVID situation re-shapes the options and pathways for Africa’s development - in support of INET’s Commission on Global Economic Transformation (CGET)

Contact: [email protected]

Share your perspective