 Thank you for attending the second of the sessions of the conference this morning. And the second session is a session that follows very nicely from the keynote lecture given by Vera Songwe. And this session will be on the impact of COVID-19 pandemic on African economies. And this panel discussion, I would like really like to see a lot of interaction in the panel, lots of questions from the audience. And if you have any questions, please put the question in the Q&A box. That's where I can see the questions. If you put in a chat function, it's more difficult for me. So thank you for your understanding. Now just to give you a sense of the panel and the structure of the panel before we get to the specific question and before I introduce the panelists. What I think is important is already been discussed in the earlier session in the keynote lecture is we need to have a better sense of what's happening in terms of growth, public debt, international trade, supply chains, investment, and so on. These are the things that are recurring questions that are coming up when you think about the effects of the pandemic on African economies. And in this panel, we'll try to have some sense. We still have a problem that we don't have enough data yet, but we're getting a good sense now of what we might expect to see in the next few months and next year. So it'll be really good to reflect a little bit about what will we already know a little bit about pandemic's effects and what we need to know in the future and what should we do in that case into support solutions. So now let me introduce the panelists first and then I'll get to where we can do how we can structure the panel. So we have a very distinguished panelist here and let me introduce them in no particular order. So let me start with Mario Pezzini. Mario is a director of the OECD. Mario has been and so he's a director of the OECD Derpence Center, a special advisor to the OECD Secretary General on development. Mario has been a professor in industrial economics at the Ecole National and Superior de Miner de Paris, and as well as the U.S. Italian universities. He served as an advisor in the field of economic development, industrial organization, and digital economies, international organizations, and think tanks, for example, IELO, UNIDO, UNIDO Commission, and so on. Maybe just a word about the OECD Development Center. It's an institution where governments, enterprise and civil society organizations inform and discuss questions of common interests. So it's a forum for where different member countries get together on discussing questions of common interests around development. It's governing both board includes most of the OECD countries, but also and very importantly, developing and emerging economies of full members. The center helps policy makers in OECD and partner countries find innovative solutions to global challenges of development. And of course, Mario will, when he speaks in the panel, will refer a little bit on what the OECD has been doing in the area on the COVID, the pandemic's effects on African economies. Now let me move on and introduce Dr. Stephen Carnegie. Dr. Stephen Carnegie is currently the Director of Regional Integration and Trade Division of the Economic Commission for Africa, UNECA. He joined the United Nations in April 2004. Before joining the United Nations, Dr. Carnegie was a senior analyst and head of macroeconomic division in the Kenya Institute for Public Policy Research Analysis, KIPRA. Before KIPRA, Dr. Carnegie served as a lecturer of economics at Eglinton University. Dr. Carnegie's periods of policy research in a broad area of areas within UNECA as a member of the editorial board, the Journal of African Trade. Dr. Carnegie was a recipient of the Solid-Kilman Visiting Fellowship of the International Tax Program of Harvard Law School in 2001, and the winner of the 2013 Alan A. Powell Award, Recognitions Contribution to Global Economic Analysis, features from an African perspective. Dr. Carnegie has served as the member of the high-level board of experts in the future of global trade governance and is presently serving in the high-level group on trade that is now looking at EU-African relations. Dr. Carnegie, very pleased to have you in this panel. I would like to introduce Dr. Moses Kiara, CEO of the Kenya Investment Authority. Dr. Moses Kiara is the Managing Director of the Kenya Investment Authority, Ken Invest, in short, a position he took on 11th February 2013. Ken Invest is a state agency charged with responsibility for promoting both foreign and domestic investment in Kenya, facilitating investors and policy advocacy with respect to investment in the country. Previously, Dr. Kiara was the Executive Director of KIPRA and also a policy analyst at the same institute. Prior to joining KIPRA, Dr. Kiara was a lecturer in the School of Environmental Studies in Moira University. Dr. Kiara has substation experience in public policy research, has published about 38 papers and book chapters in various journals and other outlets, has been involved in developing key policy documents of Kenya and, very importantly, economic recovery strategy for wealth employment, creation in 2003-2007 and the Kenya Vision 2030. Again, Dr. Kiara, very pleased to have you in this panel. Now, let me just explain to you a bit of a structure of the panel so that you're all clear about how much time you need to speak and so on. What I will do is I have three sets of questions for each of you. I will ask you two questions first in the first round and you will have 15 minutes to respond. Then I think we will have Q&A just to make it a bit more interactive at that point, allowing the audience to ask questions on your first interventions. Following that, then I will get to the third question in the second round and then you have 10 minutes to respond and again, we will have Q&A. We will break the Q&A a little bit because otherwise, we won't have enough of audience participation. We really want the audience to ask all of you really important and good questions. So if that's okay, we will start to the panel in that way. First round, 15 minutes of intervention, Q&A. Second round, 10 minutes of intervention and then Q&A. If that's okay, all right. Now, let me get to the questions and let me start with you first, Mario. The two questions I have for you are as follows. The first question is, a number of African countries are already experiencing various economic challenges and we already heard that from Dr. Songwe earlier today before the pandemic. How has the pandemic affected economic performance in Africa? Question one. Question two, several countries in Africa are struggling with a heavy debt burden. Hence, training the resources needed to safeguard lives and aid economic recovery. Again, we had heard a little bit about the public debt issues that are coming up in Africa. What is the role of multilateral agencies, OACD and so on, in addressing Africa's emerging debt crisis? The first question is about the effects on the economy as a whole. The second is specifically about the debt crisis. Now, let me tell Dr. Karangin and ask you two questions. The first question is, and again, this is to do with your own interest in regional integration and international trade, which is very important here. The first question is on foreign trade. Foreign trade is one of the sectors impacted by the COVID-19 pandemic, following closure of borders and destruction of supply chains. Given your expertise and UNICA's role in promoting Africa's trade, and we already heard about Africa and we trade the FCDA, what are the implications of regional and trade integration in Africa? How is the pandemic affected trade and regional and trade integration in Africa? First question. Second, and this is very much linked to the first question, what is the role of the African continental free trade agreement in the wake of the COVID-19 pandemic? So, would one say that the FCDA progressive installed because of the pandemic, because of water closures, or are you optimistic that the progress that was already being made will carry on? So, that's the second question. Dr. Ikari, I have questions to you again, linked to your own experience on investment. The first question is on this renewed zeal towards industrialization in many African countries. I mentioned in my question to Dr. Songwe about the fact that we see a manufacturing renaissance in Africa more recently. So, notwithstanding what you've seen before, how will the manufacturing sector in Africa, which is mostly agri-based and dependent imported intermediate capital goods, how will the manufacturing sector and perhaps more so in the case of Kenya, be affected by the pandemic? And what will it do to the investment climate also in the industrial sector? Second question is not on manufacturing, it's on services. Service sector has been hit very pretty badly, especially tourism. So, what Saturday should be used to revive the service sector and perhaps more specifically the tourism sector, which is very important in Kenya? So, I hope I got the questions across clearly. Two questions for each of you. And 15 minutes to make an initial mention, you don't need to speak for all 15 minutes. If you don't have one too, because you can have more time for Q&A, it's absolutely fine. So, shall we start? And over to you, Mario. Thank you very much. So, to be sure, just because I'm a little bit slow, you know, we are a little bit earlier here in Paris, I have 15 minutes to answer the two first questions you addressed to me. Is it correct? Absolutely. Yes. Good. Okay. Let me start with the first. Well, we know the numbers and we know that Africa region are affected in the case of this crisis because the global economy contracted 4.2 percent and by comparison Africa GDP contracted by 2.6 percent. So, one may say is affected less. Nevertheless, we are talking of 40 million people that could fall back into extreme poverty by end 2021. So, this crisis is affecting Africa because it's affecting Africa directly through the attack to the healthcare system and the capacity of people to avoid to be affected, but also because there are a series of external mechanisms that affect any Africa and comes from the other regions. First of all, obviously the decline in demand that we have observed already with the crisis of SARS that in that case China reduces internal consumption of minus 3 percent. This time has been bigger. Other countries in particular the OECD country are reducing their demand and this because the crisis have affected much more those countries than China and some Asian countries. And this means obviously that also the prices of natural resources non-renewable that are exported by Africa are obviously either declining or anyhow in a phase of big turbulence. The crisis is affected from outside through tourism is very evident in the case of Capo Verde or the Mauritius, but in many more countries this is the case. International trade is reduced. There are less commodity exports, but I would also add the movement of capital that is leaving developing countries to go towards more supposed to be secure market. I will go back on this point with the second question. So we can demand for export fragile industrial capacity and obviously the health and human crisis which is serious, but therefore the consequences in the short term are known. What could be the consequences for the meter? Obviously there are pre-existing vulnerabilities in the productive structures and these existing vulnerabilities will be exalted and so we know that Africa had problem in increasing productivity in 2000 let's say the productivity of Africa was 67% of the Asian level of productivity and now is only the 50%. So there has been a decline if compared with other developing region and only 18 of new exporters survive beyond three years. So this is a major vulnerability together with the lack of quality of jobs that has also social impact. Only 7% of African youth in the low income countries and 10 in the middle income countries in Africa have waged employment. So these pre-existing vulnerabilities are going to continue and we know that what is needed is obviously a productive transformation as it has been underlined several times by my friend Stef and I am very happy to be here with him and also with the new friends of Moses. This need for a productive transformation is very strongly there but let me also say that there are some possibilities that this pandemic situation is also creating because it's creating a political momentum to accelerate Africa's digital transformation. African policy makers implement a host of digital solutions to mitigate in part of COVID-19 and this is a local regional and continental level. In health the Africa Center for Disease Control and Prevention in collaboration with 20 international partners is working on diagnostic tests, is working on medical equipment. When it comes to education, Ministry of Education on 27 African countries were able to provide well-functioning e-learning platform for students by already May in 2020 and when it comes to finance most African central banks strongly encourage the population to use digital payment and we know that Africa has over 480 million mobile money accounts which is in other terms the region with the highest level in the world. So in all these cases we see that there has been a strong capacity to react and that Africa can use those technology as it was done in the past to leaf frog in a series of areas. I would anyhow stress that here the crucial point is not that much to concentrate on the digital sector production in itself. When you take the employment created in the digital sector in itself we are talking about 300,000 employees which is nothing in respect to the enormous amount of youth that will join the labor market. What is crucial is obviously to be at a frontier when it comes to digital but in particular is the dissemination and adoption and adaptation of digital technology in other sector. This could be a big passport for productive transformation in general. Now let me go to your second question that says in a certain sense how do we finance all of it? Africa's debt will likely soar to about 70% of GDP by end 2021 and this is up from 56.3% in 2019. So this average under my point of view remains sustainable anyhow there are strong tension when it comes to the debt concerning Africa. So Africa governments are facing a lower financial resource capacity and therefore the question of debt become even more crucial. Let me explain why. First of all when we look at the internal mobilization of resources in Africa let's say taxes in Africa are relatively weak. If we look at another developing region I don't know Latin America the tax on GDP represent 23% of the GDP in average. There are big differences in Latin America as there are big differences in Africa. In Africa we are only at 17% between 16.5 and 17% in average which means that the capacity of government to finance the policies that are required both to address the health crisis and to engage further in the productive transformation is limited. As I said there are differences because when you look inside you have Tunisia with 31% of tax on GDP, South Africa 29% of tax on GDP and Morocco just to make an example is at 26 whilst Chile that very often was quoted as an example of country capable to develop is just at 24. Nevertheless this capacity is limited therefore external flows becomes particularly important and when we speak about external flows we are thinking first to foreign dollar investment but foreign dollar investment are deemed to reduce severity. It is 10 years in reality that foreign dollar investment are reducing due to the bad way in which we have addressed the crisis of 2008 that was actually not really solved before the COVID crisis came into the game. Now UNTAD is thinking that the foreign dollar investment will reduce of 40% which is enormous 40% in respect to what was before the COVID crisis. Secondly remittances, remittances are a crucial source of external financing for development in developing countries and we economists we tend to think that they are stable they are not for obvious reasons there are countries that even I don't I don't like that approach but even send back to the country of origin the migrants and obviously this means that the resources that were sent back home from outside are disappearing or even migrants that are in countries where the level of economic activity has reduced severely and therefore cannot contribute to send back money at home. In general we think that the reduction in remittances will be more than 20% between 20 and 40%. So also the source will be weakened. When it comes to official development assistance and other sources of external resources well this is declining it was declining even before the crisis but with the crisis we decline for obvious reason as the aid are given on as a percentage of the national GDP of the donor countries and as these the national GDP will decline therefore the volume of aid will decline as well and probably that's what will happen also with philanthropy. As a general consequence therefore the external resources will also reduce whilst the internal mobilization of resources is weak. There is no alternative therefore that we address at least in the media terms the debt as a way of financing the indispensable action that are indispensable for Africa and for the rest of the world because if only few countries will get out from the vaccine from the covid crisis they will get out for a limited space of time if the other will remain affected therefore we have a problem of global public goods that needs to be put in place. As a consequence I think that the way the issue of financing in large parts will be at least in the short term an issue of health financing the crisis response by managing the debt and managing the debt means canceling in part the debt. The efforts of IMF the efforts of the G20 are remarkable they are not enough and therefore we have to continue to see how to handle these matters and by the way one way to handle these matters is not only to intervene a person with a cancellation of the debt but also to rethink the functioning of the financial international system because as I was saying at the beginning the level of debt of Africa was 50 percent now we will go up to 68-70 percent is nothing if compared to what other country outside Africa have in term of debt is enough to quote Japan that is around 300 300 percent of GDP or many European countries that are well above 100 percent so there is something in the financial system that is not working as it should African countries tend to be to have a rate of interest when they borrow that are much higher than other countries in other region of the world that have the same level of debt so here there is without any doubt a thinking about the functioning of the general system I don't know if I have answered your question I don't know if I have used my 15 minutes but I prefer in this case to give any how back the word to you in advantage of the discussion. Thank you Mario that was very helpful and very useful I think I took I had two takeaways what you said and of course there are several other points that you made but one takeaway is that the effect of the pandemic is quite widespread and it's not only on manufacturers also on commodity sectors on tourism and so on and therefore we still haven't got a good idea yet how deep and how widespread the crisis could be because we haven't got the data as yet in many countries other takeaway that I thought was very interesting was that you know we talk about the public debt being a concern in Africa but as you mentioned public debt levels are pretty high now in many European countries and also in the in the US so why is it more of a concern in Africa versus the west and there you mentioned the nature of financial markets and capital markets so on and that's a really interesting point that we often don't pay attention to that part of it that the debt is more of a concern because of nature of how we finance the debt and the constraints to financing it using commit domestic capital markets for example so I think we can go back to that point later now let me move on to to Stephen Karengi, Stephen over to you. So the first question you asked me was on COVID-19 and trade and I'll give a focus on Africa's trade and then the second part you asked me whether COVID-19 made it difficult for the AFCFTA a challenge or do we see the AFCFTA as an opportunity in recovering from COVID-19 so essentially that is how I have structured this presentation you may have seen this slide from Vera's presentation I guess what I need to say is that the trade channel was one of the most critical when it came to impacting Africa's economies and so we had a situation whereby prices commodity prices collapsed for at least 67% or two-thirds of African exports the good thing is that as the economies started reopening we were able to see some recovery although for some commodities especially oil the collapse I mean the prices before the COVID are much higher than where they were at the end of the year because of because of COVID so you saw that from Vera's presentation but this slide here shows the kind of actions that African countries took so just like other parts of the world almost all African countries took some measures one way or the other that limited the cross border movements and we know this had a big implication on the supply chains within the continent leave alone the supply chains that Africa the supply chains breakdowns that Africa was facing with the rest with the rest with the rest of the world so essentially we have we have used this data from Oxford coronavirus government response and as you can see they range from no restriction to ban on all regions or total border closures and as you can see most almost all African countries especially between the months of April to September actually had a very stringent lockdowns and that impacted on what we saw on trade so again you saw this slide from Vera's presentation what happened to Africa's trade with the rest of the world and what happened to Africa's trade with itself now what I would want to emphasize here is that intra-african trade even though it fell it did not fall as much as Africa's trade with the rest of the world which is something interesting and we'll come back to this issue when we talk about the AFCFT again when we compare this story with what happened during the financial crisis again we see some resilience on intra-african trade compared to Africa trade with the rest of the world so there is a storyline here that the argument that depending of intra-african trade is a critical pillar for Africa's resilience is confirmed back in 2008 impacts and again during the COVID-19 the COVID-19 impacts of course if you look at individual countries this is a case of what happened to Uganda so Uganda is one of those countries that has very good statistics on informal cross-border trade and so it was possible to use the data that is collected by the central bank of Uganda to show how informal cross-border exports actually collapsed because of the pandemic now again there is a question that we have to ask ourselves here and I can say later what we are doing with the African Union to address this issue a lot of intra-african trade also happens to be informal it also happens to be trade also that includes different segments of the African society so if you have lockdowns that do not pay particular attention to the informal cross-border trade you end up sometimes not understanding what is happening to those informal cross-border traders informal informal cross-border traders that you do not have statistics and data about and again I think I had better talk about the issue of identity digital identity because this is one of the aspects that this case of Uganda represents that have been exposed by the COVID-19 very quickly the not all African countries were affected the same way if you had gold as part of your exports things were not as bad if you had most of your exports at petroleum then things looked very bleak for you and I think this I've shared this slide so the participants can be given and they can see for some countries that have good accounting for at least 35 percent of the exports things were not as bad as for those countries where petroleum oil accounts for at least that five percent of exports now again in the keynote presentation we talked about the question of food security so what we observed because of COVID-19 there were moderate prices on the global staple food prices and this is because of Africa's dependence also in terms of some of its staples especially rice and wheat from the rest of the world and then we had all these supply chain breakdowns now but the the the positive story if you look at the statistics that are being released by FAO is that we seem to have avoided the food crisis of 2008 in fact as you can see in my chat we showed the what happened to the food prices on august 2007 to around november 2008 and if you compare that with what has happened to to the prices of food you know you don't see that the same kind of spike because of COVID COVID-19 but then again we are still in the pandemic so I think we also have to put this into context so we talked about digital I think during the session and I think Mario has also talked about digital and you come back to this issue when I talk about the AFCFTA but just to say that for the continent we have actually seen and observed how countries and companies have actually been able to adapt to the pandemic through digitalization so if you look at what has happened we see there has actually been a lot of adoption and I think this is the point Mario you raised that adoption becomes very critical so we have seen actually an acceleration on the use of digital when it comes to e-economy but also this becomes a very valid issue when we talk about the e-commerce protocol that we are hoping will be negotiated before the end of this year under the AFCFTA and I'll come back to this as I talk now to the second part of the question which is the role of the AFCFTA in the recovery now so the first thing is that the AFCFTA is going to help the continent to diversify away from commodity dependence because there are rules of origin within the AFCFTA just like in any free trade area agreement that we believe are going to be essential in the creation of regional supply chains which will make use of the raw materials and a lot of intermediate inputs that are produced within the continent so that's the first point that we hope that the AFCFTA and so basically what I'm saying is that the AFCFTA is going to be a pathway out of the economic impacts of the pandemic the second thing is that it's going to drive industrialization and as I'll show very clearly we have done some simulations that indicate that industry is going to gain by between 36 and 43 billion dollars in terms of intra-african exports just from the AFCFTA and this is only in the context of removing the tariffs we have not incorporated here what happens to the services trade and how that catarises even more manufacturing and we have not included in this simulation what happens to better market functionality because of the these two issues including the competition policy question and the e-commerce question that you raised during the keynote and then of course there's going to be better facilitation trade facilitation and better transition to the digital economy now these slides here basically gives the figure that are given of between 36 billion to 43 billion by 2040 from the implementation of the tariff phase down under the AFCFTA most of that happening in industry followed by agriculture and food and then energy and mining and I can come back and answer a bit more but this is basically simulations that we have done based on the modalities that are being implemented under the AFCFTA and we can break it down a little more to show what are those going to be the major sectors that are going to be to benefit from this component of industrial industrial growth so as you can see most of it is going to happen in the vehicles and transport equipment there's going to be a lot of that in energy there's going to be a lot of that in metals machinery chemical products and then of course you can see to us the right panels of these slides there's going to be a lot of agro industries and agro processing exports into african that are going to benefit from the AFCFTA I want to come back and say that these simulations do not capture the liberalization of services and we know those services we have agreed to open up various sectors in services sector and we have not been able of course using the cge models to capture the implications of some of the e-commerce investment policies as part of this as part of these simulations and now I'm coming towards the end to say that it's not just going to be the developing countries within the continent that are going to benefit but also the LDCs within the continent are going to benefit so in terms of recovery from the pandemic through the AFCFTA even the LDCs have a tool and an instrument to drive the transformation of the economy because we show that compared to the baseline the african LDCs are going to experience a larger growth in terms of the industrial and manufacturing sector due to the AFCFTA more than the total for the continent or even the african non-LDCs and finally we had of course we asked the farms how the AFCFTA could help boost cross-border e-commerce now this is some work that we are currently doing and the this work was motivated by the idea that we need to lock in the adaptations that companies have experienced during this time of the pandemic and basically what they say is that for them they think harmonization of the loss or taxation, consumer protection these are issues that I had during the keynote speech, harmonized loss on electronic trades, all these harmonized data standards all these are going to be very important for them if the AFCFTA e-commerce protocol could deal could deal with this and I would want to conclude by saying that we are at an advanced stage as ECA working with the african exit bank to develop a business to business e-commerce platform which will work under the rules of the AFCFTA and the way this is going to work is that the sellers and the suppliers through that platform would have to meet the rules of the AFCFTA the rules of origin of the AFCFTA but anybody can buy from that and we believe this is going to be a platform that would be able to catalyze e-commerce and it's also going to help SMEs, young people and even anybody who wants to use the rules of the AFCFTA to grow their businesses so I hope I've been able to through this presentation to answer the two questions first on what happens to the group to the trade and secondly how the AFCFTA could help in the recovery thank you. Thank you Stephen it was very interesting factually very rich and again it's just sort of my two takeaways from your presentation one takeaway and what's really interesting is the point about intra-african trade not being as bad affected as paid with the rest of the world but then linked to that is the point you made about informal cross-border trade because informal cross-border trade would probably be more affected by cross-border restrictions move with the people for example than perhaps trade happens through ports and and so on so that's the interesting point that the informal trade cross-border trade might have been more affected than the trade that happens through formal sources and that's something we need to think about. The other takeaway I thought that was really interesting is the point the work that you have been doing on simulating the gains of trade by sector and the point that you made that in sectors like machinery, automobiles you seem to see even the most pessimistic scenarios seem to see significant gains that's really encouraging because one why is it encouraging number one because those are the high value manufacturing sectors these are the technology intensive sectors. Number two because the sectors are not as much of a matter of the pandemic that would mean that the AFC the freedom agreement would have to cushion the blow of the pandemic that's happening in other sectors that we already Mario talked about tourism and so on so actually the freedom agreement might actually help to mitigate the effects of the pandemic if it if you can push it forward in an accelerated way so that's very encouraging also and that was very interesting something that one wouldn't have known if it wasn't for your presentation thank you so much for that let's move on to Moses you know you have your two questions and if you want to make an intervention now thank you. Thank you thank you very much Kunal for moderating very well and let me also start by recognizing in my friend and former colleague Steve and also Mario for meeting him today so it's very exciting to be able to pass pretty in this in this presentation. Second point I'd like to break into Croatia actually my my time at Kenyatta University ended yesterday it was a bit too short to to hand over to the new person so that's why so I want to discuss that now as I speak I'm not necessarily wearing the the art of Kenyatta University I've been there for eight years and two times but it's been really exciting to see investment you know what has happened you know over the time so straight away and go to the to the to the my two questions one is about of course the industrialization and the investment climate I think as you you rightly said Kunal the many of our countries industrialization and also private investment are very very very important industrialization because of the promise of a job creation which is the maybe the leading socio socioeconomic stability charge of many people don't have employment and private investment because of the debt in those situations public debt situation where the government is running out of space and has to lie much more on private capital to come in and do what is required. I have been participating in Kenya we created when the when the pandemic just became very tough in March of 2020 we created our room or our commander the control center where we were basically looking at what is happening right to manage disruptions in in in business minimize as much as possible right to coordinate videos prayers you know try to also prioritize interventions to see what in duty to do first so are the next intervention you can get a maximum effectiveness out of it and also I was in this response team and we are the you know technical support from McKinsey most of you know McKinsey since we made well and we were able to try and maybe reduce the impact that could have in very very careful so let me say that initially we were seeing about up to 80 percent of industrialization industry jobs vulnerable of course depending on how the COVID pandemic you know and developed I think maybe the final outcome is this working going on to to look at the data very very clearly to see where we are but maybe it's not as bad as initially initially fear we we also at that time when after doing a small survey we found the especially in the essential goons category where about 70 percent there was about 70 percent decline in demand so you can imagine a sector facing that for an essential it was even worse where we are about 91 percent decline in demand at some point when we were doing this again so the industry was quite hit and after our analysis the sectors we found most sensitives were food products beverage tobacco textiles and empires and you can see these are most of the things that we export and when travel wasn't disrupted when there was any movement with lockdowns all of them obviously this was affected and we the initial numbers was actually exports declining by up to 25 percent and the imports about three to four percent so we I think around the Kenya but I think I can speak about Kenya more because I was more involved in that where we we came up with a very quickly a stimulus package program basically to give industries you know some tax breaks including also paying them refunds tax refunds that have been there for a long time to just give them a liquidity we started promoting more by Kenya they're all Kenya because I think we really wanted to to create awareness so that there can be a lot of consumption substitute for exports and then removing the logistics challenges that were there and also reducing because we did so many interventions because we started thinking of of a proper stimulus package more or less like the first week when the when the crisis hit us so for the administration what do I see yes the big problem was that it was very difficult to get inputs or inputs that as you said Kunal that we depend a lot on important technology and the machinery and so that and there we see you know a potential where that with now the developments we have also seen at the ASS SCFTA that we could actually see how investors can come in now that the market is even much bigger to start producing assembling and developing the machines and technologies that are required when you have shorter distance in terms of crisis it is much easier to move those kinds of capacity are within a continent or religion love and maybe going even in a longer distances but another thing which we found very interesting is also the ability to do the capacity for innovation within a very very short time we could see when small small polytechnics some of the polytechnics are small institutions where they do basic technical work turning themselves and being able to to develop masks you know stitch masks and supply to a lot of people who are desperate especially when it was very it became mandatory to wear masks as you moved around many companies also moved away from their traditional lines and it started a new line to manufacture masks or actually to also to manufacture to manufacture these sanitizers yeah it was within a short time actually the problem sanitizers more or less disappeared because different companies were able to come in and and they feel in the space we are different innovations even even traders which are actually I think the information I have is that they are working and I think they could become very great technologies with a bit of more work so innovation we have actually been surprised by the by the capacity to innovate that we didn't really appreciate before Covid how much it was so it is now and this as a as part of a post Covid recovery strategy we actually are now promoting a lot of these groups to innovate a lot more and help them to commercialize some of the technologies that we have produced we actually it was surprising to see when we looked at our the structure of the economy what we are buying what we are producing we came up with a list of about 175 commodities that we would actually produce internally and without necessarily having to depend on the on the imports so it was a Covid was a little challenge it just shaken the industry you know that we really which is being looked for to for to create employment and to create also market for farmers but it has also shown us it has revealed the capacity and the potential that we have actually in our countries in Africa what we need now and we are actually at the investment side we looked at the invested investment opportunities and started looking at critical areas that private investor investment can be directed or can be can be launched to go to once so for example machinery technologies health sector you know space which was quite weak among other areas so I think I will go to the next question which is which is but before I go to the next question the key things that we of course affected the industrialization is as I said is a supply chain disruptions downsizing because of the area that was there 11 big crime and the related charges but we were able to see with a strong command center where you are looking at what's happening on a daily basis and then getting reports coming from the from the from the field you can be able to to minimize and then hide the process the second idea is to listen again this is a key sector for Africa we in Kenya is contributes about 10 to 11 percent of of GDP is an important sector and this is one of the sectors really very very hard hit because of people could not travel and because of the restrictions even domestic even local people who not move from one part of the country to another so it also affected the domestic tourism and to a large to a large extent and but the the encouraging thing is that in demand for Asia and the travel remains very strong if you ask many people I think at a personal level to say what they hated most about the COVID was the fact that they had to really be restricted within their homes or within small spaces for long and they could not go on already and so demand means that the sector has a lot of hope of course with the vaccine the vaccine news was good although now that is being dampened with what you have seen about the new strains of the virus that are not being a medial assistant or the vaccines are not able to be effective against them but nevertheless the sector what the question was is how can we revive this sector the first thing is for me I think it's good to have a specific tourism sector or services sector task force which is basically looking at what is evolving on a continuous basis what are the emerging opportunities what can be done to take advantage of these emerging opportunities how to to help potential companies not even go on if they are strong and they need only support for a short time of period to be able to be back on strength again so that kind of task force people focusing nothing else but daily monitoring what's happening is very critical the second of course to to to maintain an online destination of disability because we believe COVID will eventually go away and you don't want to start from scratch to to promote your understanding after the COVID you want to still want to maintain even if it's on the luxury that disability we the other areas to really look more on on what we have domestically the african tourism sector has been largely biased you know in favor of foreign tourists but the many of the economies now with the rising per capita incomes and the disposal income they present a very strong market we've seen that as well as you know conferencing and other types of domestic tourism all that needs to be done is to to repackage the products because the the tourism product that appeals to somebody from Finland in order to start in the same that appeals to to a Kenyan tourist so you just need to be able to repackage those four products to make sure that we can capture more of the domestic market and then to to ensure the standards in hospitality and the food sector maintained hygiene is maintained so that again you don't have you can manage reputation risk by bringing this diversification of products it's very crucial and then a world world decide financial support packages is very very essential because sometimes the difference between life and death of an enterprise could be a matter of a couple of months so the support is required to be able to step in in those short moments of support so that you can be able to save you know good businesses for future growth so I think I hope I've been able to respond to your questions now well I'll be looking into here if there are further questions on the same areas thank you very much thank you Moses thank you so much I can I mean let me just again take then what I take to the two points I would take from what you said first what you said about investment and particularly imported capital goods so and this is not only true for only Africa it's true for other developing countries other regions they're very dependent on imported capital goods from the west from japan and and so on the tree and the pandemic has had a big effect on on trade so in a way investments were affected because you can't as a firm in import capital goods which you need and that is a interesting point the link between trade disruptions the pandemic and then and that investment and of course we also heard from Stephen's presentation maybe with a fc fta that might change a little bit if you have more domestic machine more product domestic production of machine goods following the integration integration initiative that's interesting so you have to see what happens in the future the other point that you made which I think is really good that tourism sector has obviously been hit but there is also the argument there's a pent up demand for travel once people can travel and ease and people are remote but people are vaccinated and so in a sense people there is always some work data on there's a lot of people saving especially in the west in anticipation of spending on leisure in the future so the point really is that one has to protect the tourism sector now find a way to protect it now because demand will increase quite sharply absolutely yeah could be a few more months could be next year we don't know that pent up demand is there and therefore it's important not to lose the tourism sector and find ways to buffer it from this short perhaps a relatively short term impact of the pandemic so that's a really important and I think that's worth keeping in mind when we discuss the effects of the tourism sector all right I'm going to do if that's if I'm okay with Mario, Stephen and Moses I have questions already in the Q&A from the audience and I can see the questions are kind of very nicely aligned with the interests that each of you have I would ask one question to each of you from what I've received from the audience and I will let all of you know what the questions are just for you to think about them but again I'll start with Mario so Mario the question that is there in the from the audience is that as you said you know we need to think about expenditures and obviously given the situation with the fiscal situation and so on then the question then would be how do you prioritize expenditures with sectors to invest in and this is not only the private return but the social return investment so question linked to that is that is there any work that the OECD department center has been doing on social returns to investment in particular sectors and can one think about how to prioritize different sectors if one had a the governor certain limited amount of funding what would where would spend the money on so that's your question but let me before I let you speak answer that question let me give the question to Stephen think of that's a quite a difficult question actually Stephen from let's come from the audience so there's somebody obviously wants to teach CG models his name is Avi Kedir he asked the question that what are the implications of the AFCFTA on skill versus unskilled labor or trade in unskilled labor so the skilled differential is a really interesting question because we know that on CG models you can say something about that so therefore have have you done some work on this and if so what would be the your expectation on the skill effect impact of the AFCFTA so that's a very specific question to you to Moses the question is as follows so the question has come to the audience it's about digital technology and the concern that it might leave some people behind right because we believe in the UN leave no one behind so it might leave women behind it might leave the youth behind it might leave people who are readily illiterate behind and this is a really important question in Kenya or exactly as we heard from the song earlier Kenya is the leader in many of the technology so is there a concern that digital technology but as it's so remarkably transformative in the case of Kenya can actually leave some people behind and then what does one do okay so we've got ready three great questions from the audience so let's start with Mario the question for you thank you record to me Kunal please how long can I speak 10 minutes is that okay I mean okay it's very very tough okay let me start by saying that the question is really appropriate in the sense that for many years decades the international organization have discouraged countries developed or developing by doing any form of planning thinking that the market would have found itself the different incentives to orient the decision of investors and this was wrong because in many cases the market is not necessarily the best in suggesting what to do and in particular in country that produce natural resources because all the incentives goes to specialize and actually become dependent from the production of natural resources and we know what are the consequences in terms of Dutch disease that this type of situation can engender therefore I am absolutely convinced that we have to rethink collectively how any strategy for developing countries and for countries in general should be designed I'm not obviously pretending that all the problems existing today are simply internal domestic issues I obviously must recognize in particular when we speak about covid that there are general mechanisms that affect the capacity of countries to decide where to go nevertheless this dimension is crucial how to build therefore a strategy for a country as we have dismantled a series of knowledges that we have put in place in the development center I launched some 10 years ago something that is called multi-dimensional country review I agree is a very bad name that's what my mother is telling me all the time I don't understand by some what you are doing yes in practice we help countries to define strategies and obviously we don't pretend to tell what is the strategy but to work together why because in many cases the bottleneck to development the traps that prevent further development are specific are context specific so you cannot identify as it was pretended by the Washington consensus 10 laws that maybe you can write in stone and then pretend that everybody has to use the same so first of all what we need is to understand what other specific assets that a country has what specific asset a country can create and very often not even a country but a place in fact a very important crucial dimension is the local dimension in my country in the 60s we used to identify the major investment to be made and we turn out to produce cathedral in the desert simply not because the market is better but because the central government doesn't have necessarily all the information required to understand what are the opportunities that exist in a place and remain unexploited so I think we have to reinvent the mechanism of of designing strategies and vision involving the people look what is happening in many countries development developing people in the street asking to have more voice and that's exactly what we need to build in a certain sense with a new tool now stated that which is very general and I don't want to duck the question let me just give me three minutes and I will say the following thing I mean an economist a landing on Africa from the sky and pretending unfortunately that's a real vice of a citizen my colleague to tell country what they have to do even without knowing the country there was somebody saying oh yes natural resources are the comparative advantages of Africa but we know that this will not provide an answer for long productivity is declining in the mid and long term in this sector and moreover what type of employment are you creating and what type of dependence of Africa are you reproducing so other are saying I use the global value chain and I like all the things that Stefan said about obviously trade but remember 69% of the growth of Africa came from internal demand this is a great present a great a great thing that needs to be exploited further therefore yes global value chain let's think about regional also value chain and how they can be organized nevertheless that penetration remained very weak so some are saying okay why don't you create some free zones imitating what has been done maybe in china and then you attract foreign direct investment why free zones there's a problem of firms it's not necessarily what they do inside go around african towns and you will see how how work the interpreters I mean people that are heroes they work every minutes of the day to find solutions to the problem that are not their willingness to work or they're capable to be an interpreter it's the local environment that is not providing all the resources that you need when you are a small interpreter you cannot do everything inside therefore you're going from outside but if the outside is weak whether you find logistic whether you find an accountant whether you find a center to control quality of products whether you find a center that inform you about the trends of of fashion you have to do everything alone unless you have an environment which is good so some people say let's build a free zone so that at least there we can control and we can put an environment that is helpful many economists obviously speak about an environment conducive to growth in reality they think how to modify the legislation so that big investment can come from outside okay that's important maybe helpful but in reality a lot has to deal with the local environment now apart from free zones that you can build many but you cannot answer all the need through the tools and obviously I like very much the work that archive okubai has done in Ethiopia and also theorizing about it but for me we have also to take into account zones where there are already small firms very often informal concentrated and there do industrial policy not in terms of obviously financing is always important you know it says you go to see a doctor and you ask what do you want to be better so what do you want more money okay fine but then what you need is in reality services real service the center of control of quality and the technician that tells you that there is a new innovation that maybe you could adopt these type of policy are desperately needed sorry to be long no Mario I think you've got some really really good points there I mean the point a bit about the fact that often think of Africa having this corporate commodity natural resources but that might have been in the past but that's not no longer in the future for one as I said earlier today there is a manufacturing renaissance going on and secondly also we see increasingly now declining commodity prices move away from non renewable energy sources so surely it has to be the case that what advantage cannot dictate the way you want to go in the future right that's so so that's a very good point the other point you made I thought was excellent that often there's a preoccupation with special economic zones and you know we of course in the success in China for example and actually to be honest you haven't seen British companies being successful elsewhere in the world there have been dismal failures in India for example so yes in Africa I think Ethiopia is a good example where it have worked but one should not only focus on special economic zones because you're creating kind of a very a bubble and that's not what you want you want is more generalized investment climate reform and all firms to to do well especially the domestically domestic firms that's a really important point that we can come back to later let's move on to Stephen Stephen so you have a very specific technical question on on cg modeling you want to take that now no thank you thank you very much and thanks to my friend for the difficult question so to say the following in the results that I have presented there is a possibility to go to another layer and I'm just going to the technical part because we know in every country you have household survey data so it is possible to take the macro results that we have from these simulations that have given the three scenarios and through a micro simulation model be able to show what is happening for the different segments of households which of course would be a good representation of the labor market that part of the analysis is not done so so at the moment what I can say is that in 2013 we did some initial work with ILO and FAO we published a book it's a book published by ILO and FAO it's called shared harvests trade agriculture employment some of you may have seen it you can actually see it it's online and in chapter eight what we tried to do was even before the negotiation started started speculating on what some of the simulations scenarios would look like and in chapter eight of that publication we have some focus on agriculture because if you were working with FAO and so what we were able to demonstrate at that time before we knew how the modalities would look like was that actually unskilled workers in the agriculture sector would actually benefit from the AFCFTA at that point but of course as we know the distribution of these gains depends on what sectors are gaining and what sectors are losing and that is why this second layer of a micro simulation analysis is so critical so Abby just to disappoint you we have not done that second part of the simulation but the good thing the good news is that the World Bank towards the end of last year produced some additional analytical work on the AFCFTA and basically what the World Bank has done they do that the same scenario I will I the scenario they do using their their CG model is much more ambitious than what is agreed in the AFCFTA today but then they go to the second level where they actually disaggregate the labor market including by gender and if you look at the the work of the bank from that they published towards the end of last year they do actually answer the question you are asking Abby both in terms of what happened to the skilled workers and skilled workers and they go to the extent of including the gender dimension of the implications of the AFCFTA and the results are very very encouraging both for gender inclusiveness but also for the question that I also see of not leaving anyone behind within the within the the analysis and this is because then they also capture the services liberalization so that's that's that's all I can say for now that's very interesting so this is the World Bank report is that is that right yeah yeah it's I can look for the title but it's somewhat they published the other they released towards the end of last year and basically the scenario at the macro we discussed a lot but then what they did since they have the advantage of having the poverty service for the different countries in the world they took that data and then modeled you know looked at the labor market for each of those countries and then imposed these macro results at a micro-semination level and they have very interesting results on what happens both by gender and also by labor segments excellent thank you yeah Moses the question was how can we make sure that we don't leave anyone behind with digital technology and particularly in the case of Kenya yeah thank you thanks Kuna and thanks to Paula for for that question I think I'll basically answer this question in two ways again again from the experience of Kenya because this is what I have been doing every day and first I would say I think the the focus on creating digital villages even in the most remote parts of the country making sure there's electricity and making sure they are digital villages so that in those villages even somebody who has a iterate can go and say I would like to do one two three and there are people who can support and they help them to do this it's something we see all over in in Kenya now because of the cypher cafes where somebody goes uh then there are people who have never gone to school because of mobile money they know where to press to be able to to withdraw the money even if they don't know anything else so that example has shown that the risk of leaving some categories because of digital technology and revolution is minimum another example you see some of the very informal we call them micro enterprises of lots of women they derive by every day four a.m in the morning they go to the to the farm so people supply produce they buy it then go and sell they retail it you know and to get the money they actually borrow every morning and they pay back at the end of the day every day and they are left with a profit and they do all this through through mobile phone and the financing agencies are able to to provide this micro credit in this kind of format so that example and the other one is how we distribute social support like cash transfers to the very hard to hard to cope who may not be able to to work or do it by themselves and it can only be sustained by cash transfers from government they get to do and pass through mobile money and they are able to you know so those two examples show you that actually digital technology rather than having the risk of leaving categories behind is actually a way of inclusion and they are the bringing everybody there and then if you combine that now with the digital villages which we are as a country are championing this and then I think the risk can be combined and together with the training there are a lot of technical training issues all over so that people can even learn and basically from digital skills and even the transition of schools thank you. I think that was very important was the intervention your response because it's really been quite remarkable how much mobile money mobile banking has benefited to the poor in Kenya but also in many other countries increasingly now and that's quite important to keep in mind that we thought that might be that might be a challenge but it hasn't really proved to be a challenge particularly the case of Kenya and that's that's something other countries can learn from I think. I have now a question again Stephen I'm sorry you're getting very precise questions for the audience today so there's a question which I thought was really interesting the question was that so the informal cross-border trade that we see has declined in the pandemic would imply that border towns like let's say less than South Africa border towns in between across the two the border would it particularly be affected because they are the ones who essentially which are where the trade informal trade is really happening to the border towns so do we see evidence of that I mean we have any even preliminary evidence that the border towns have been affected because informal cross-border trade has come has slowed down. No thank you thank you actually there's you know the wild food program the wild food program as you know they are the largest logistics company so to speak in the in the world they do actually collect data in some of these some of these some of the countries and in Africa they collaborate with institutions like the farming R1 system of that is run by the USID and they have massive amount of data that they collect that they collect every day so I happen to be part of the network is it network but an email list where the wild food program normally shares some of the data of what is happening at least in Kenya including the cross-border trade especially where some of the refugees some of the border towns where we have refugees or where they cross and the evidence is that yes they are actually being impacted because as you know when it came to the to the to the closure of the borders it was also the security there the security apparatus in most countries were actually activated so it was very difficult for even informal cross-border traders to use what we call informal informal informal routes because the national security apparatus were also were also impacted so what happened and this is now where the adaptation came in in West Africa these informal cross-border traders basically organized themselves and they started aggregating they started aggregating they are their trade giving it to the in one track and being received in the on the on the other side so instead of it being informal it started becoming a bit formal as a way of adapting to the challenges of the of the of the of the of the border closures now of course also I talked about the acceleration of the digitalization so the the use of mobile money people moving now to mobile money so that they can be able to to to to to pay each other across the border also became a way of coping mechanisms so it's true the livelihoods were impacted but like I said um there was also an um sort of an adaptation by most of these border communities to try to minimize um the the the impacts of the border of the of the closure of the borders and having to to be on the wrong side of the law because of the of the national apparatus being uh there to enforce to enforce the law now so let me conclude by saying that um we are currently working again I said we we are working to come up with the African Union guidelines of facilitating cross-border trade now who I am talking about guidelines is because all of us are familiar with the trade facilitation agreement the AFCFTA in the protocol of goods one of the annexes is about trade facilitation now the AFCFTA trade facilitation annex is modeled on the WTO trade facilitation agreement but the trade facilitation agreement did not anticipate the health dimension of this cross-border trade so the AU guidelines that we are developing now are basically taking on board the best practice that the regional economic communities have come up with to facilitate cross-border trade and we hope we can actually have that agreed at a continental level so that we can also take care of these informal cross-border traders including some of those innovations of the of their own of the aggregation of their of their packages thank you thank you Moza actually uh thank you Steve actually you answered a kind of question came from another uh the audience about how will the AFCFTA handle cross-border trade this other question comes from uh Rose Fonte and this is again goes back to the CG modeling question actually that how do you capture cross-border trade in a in a model that can tell us about the effect of closure of cross-border trade on gains of gain some trade losses from trade so that that'll be very difficult I would think right because you don't have the data you need to put into a CG model for doing that am I right that's true that's true because the data we use is basically the national accounts uh the the macro basis the national accounts and to the extent that does not capture that so you could actually be a underestimate or by estimate sometimes depending on how macro accounts were constructed so that's correct yeah it's something to think about as a potential research area to get into isn't it for future for students listening into this uh panel so perhaps there is a very nice phd thesis out there that can be done on this uh using primary data obviously you need to collect your own data for this to do that um now let me let me ask you a question Moza on an issue that actually also relates to what mario also said and again the question for the audience about PPE like uh for example this whole thing about that we know now that what we've seen for the pandemic is countries didn't have PPE production was so much dependent on you know other countries china and so on and that also links the question also on pharmaceuticals to vaccine production right um I mean Kenya has a pharmaceutical industry um but vaccine production has not really happened uh there as far as one knows so the question then is there a now one understands the importance of domestic production domestic production capabilities especially when one needs sees that when this sort of pandemic the pandemic happened pretty much countries close borders and now we are also hearing about export controls of vaccines and so on so what do we what can you say from where you were in the can invest about that question of building up domestic production capabilities particularly around uh PPE and maybe even vaccine production thank you very much for that question and therefore our colleague who has asked that question uh as I indicated actually one of the things we've come out with from the from the world or situation room as we call it is actually to come up with a post-COVID recovery strategy and one of the key things that have come is that you know now greater focus on food medicine pharmaceuticals and the issues like the PPEs that you have to think now uh in the future if there was a you know if this was to continue or there was even another crisis like this when there was no trouble you are not able to import and all that what are the basic things that you need and it looks like every country needs to try and at least have some level of capacity to to be able to uh to produce basic needs like you know food some uh some medicine and and all that so uh PPEs pharmaceuticals actually have even the medical supplies and equipment have become the the the most uh at the top of the list now area where we are encouraging investors to go to uh of course the the issue of the PPEs is um whether you can sustain and demand if you look at the entire situation whether we didn't have COVID-19 would you sell the uh the PPEs to would you still have that big demand going forward and this is what we are discussing with as we package the opportunity to investors we have to to project whether there is a good demand uh in a in a in a in a future without uh COVID and the AFC CFTA again helps because with the 1.2 uh billion people with now great awareness about health uh I don't think we are going to go back to a situation where the level of hygiene uh or basic care will be where it was uh pre-COVID there will be high level you know people have come up with uh uh these uh small equipments where you can wash your hands uh without uh using your hands to touch anything if it's something being used for many people you step on one one pendulum for the for the sanitize our soap the other one for the water and these are things I think will be sustained going forward regardless of whether COVID is there or not which is likely to have a major effect on the status of uh public health public hygiene in the in the in the North Africa but also around the world so uh the simple answer is uh yes PPEs from the supercars are among the top now as areas we are looking at investment opportunities but we are looking to see uh whether even when you bring the continent or FTA uh in the picture whether you see our strong um and demand that can and sustain uh size of investment thank you thank you mosey in fact the point that you made at the last point you made it's very important that it is also not very used to every country specializing but using PPE equipment if you have the AFC FTA right I mean you want to have regional specialization and then you have cross then you have inter-african trade so there also might be a bit of a mistake if countries are specializing in where maybe that's not in their best their best interest so I think that's something to also keep in mind and and I think that's also costly specialization is also not a very good idea right but before I leave this to you if you allow me just a few seconds remember that we've been looking at the pharmaceutical sector even before uh uh putting COVID and see who knows this because I know we have discussed with them once or twice um and the the the solution we find as a limiting challenge is that when the global agencies that buy medicine and is distributed to countries often they're not buying from developing countries only in the moments of crisis they can buy from them which means the good is okay but they only buy not all the time but at the at the moments when they don't have an alternative so I think because one of the questions we are looking at was what can we do to implement international agencies to be able to support this this is one of the areas we need to see the global WHO and others who buy medicine and distributed to developing countries need to be on uh allocating uh with some level of demand and on us to manufacture this in developing world absolutely that's a very important point thank you um I was going to ask you to actually uh for a third round where I was going to ask you a third question given I'm getting so many interesting questions from the audience if I with your permission Mario, Stephen and Moses shall we carry on we have about 14 minutes left anyway and it's good to get the question the audience and you know and respects it more interactive so therefore Mario I have a question for you and you could also in fact reflect on the question that I raised about domestic production capabilities I know you have a specific interest in that so are we looking at a new industrial policy post-COVID so that's kind of one question you can think about the other question that came from the audience is that so we talked about fiscal deficits and they have increased post-COVID obvious reasons but what is what is the safe level of a fiscal deficit when do we say no that's just too much is a 10% of GDP is it 15% of GDP is it 20% GDP can one provide some kind of a marker on this or is it very country specific so this is a tough question for you to answer so you need to give us a a kind of a marker that this range this particular level of GDP uh fiscal GDP becomes a problem for a country so that's your so your two questions there a new industrial policy post-COVID and what would be the safe level of fiscal deficits you know in the situation thank you you got on mute yourself yes yes yes thank you very much let me start with the second maybe to say that in reality there is no answer because in reality the question of the debt is very much the question of the financial system as such and there the crucial element is trust and our trust may work so the point is how do you can assure the condition of trust that allow you for sustainable debt uh in in specific conditions so we know that at present there are countries like Japan that are at a very high level of debt but as this debt is mainly carried on by the internal Japanese population then obviously you assume that the level of trust that will continue for long and in fact the mechanism doesn't put any specific problem at present you have also in Europe mechanism uh that continue to function despite a level of trust because despite a level of debt because the trust that the European Union itself has been capable to create then allow for level of the rate of interest that remain particularly low and that's exactly the reason why I was mentioning the need to reconsider the function of the financial system because is it capable to recognize and to rank the countries accordingly with their real capacity to produce trust and therefore at a certain point to pay back the debt that's the the major question uh let me also say that in this respect the present mechanism of ranking do not necessarily help the countries because they are based on criteria that probably do not apply to all countries as they are so uh in in more practical terms we all always refer to variables such as the rate of interest in respect to the tax that the country is capable to raise so in a certain sense we go back to a point I was just touching at the end of the first question and this point was mainly the capacity of fiscal reform uh let me be clear on this point I am very uh convinced that we need fiscal reform I'm very convinced that fiscal reform are possible and one of the reasons is exactly the observation I made before if in average in Africa the level of taxes out of GDP is very low there are countries where this is not a case I mentioned Tunisia I mentioned South Africa I mentioned Morocco why they are so relevant because if they have higher level of taxes it means that fiscal reform are possible now the point is how to get there and how to get there is exactly the fiscal reform that needs to be put in place I'm very pleased that together with the Africa Union we have been producing in the last year something that we call fiscal revenue statistics because as we produce it also you know it's in the country but also in Latin America and Southeast Asia this allow to compare and when you start comparing you realize not necessarily that you have to copy the other but at least that there are possibilities because others have done in a different way nevertheless we need to be extremely clear if at present we would put in place immediate effort for austerity so to reduce the debt their result will be the worst possible scenario that we can imagine we saw already in 2008 what an accelerated unneeded and actually harmful efforts to immediately go towards austerity have produced in reality in many countries particularly the OECD country we have a period of almost stagnation that came before the crisis of covid and now is even more exaggerated and that's why fortunately a series of countries are now promoting general efforts for example in Europe to have funded to help the recovery my point is fiscal reform are needed but not now what we need now is a new deal what we need now is a global effort to relaunch the economy because the economy is not retaking off with the exception of some countries in Asia including for example China but not only also Vietnam and others with this exception the rest is not coming so we need to relaunch the economy and not now to put in place austerity but after then we will have to consider also for reason of autonomy freedom and sovereignty of countries to increase the level of of taxes now the other question the domestic capacity domestic capacity in many cases I was trying to say before already exists and they are there and they have been there for years the point is that we do not recognize them we do not identify them and we don't help this capacity to grow I don't know one day as I am old now I will have more time to think about it I I would like to understand why for the economies the investors come always from the sky they are never here they are never people like you and me they're leaving a close and we are friends no they come always from the sky and therefore we have to guarantee general condition for them and not for the people that are there domestic capacity are in Africa in many places but we need to cultivate this capacity and to help them grow we were mentioned in tourism it's obvious that there are capacity in East Africa already developed the problem there will be that tourism is a reputational industry once you invest and you build a reputation you are successful one there is a disaster then you lose this reputation that you have built over time and now the efforts will be to recreate the condition but the asset are there in other cases the asset are not there in other times the tradition not identified the capacity not identified are not there and therefore we will need strong industrial policy from the state to create comparative advantages here the example is very easy things to Korea South Korea South Korea was a country after the the world that they had that have level of income per capita much lower than many African countries at that time and today is one of the countries that has shown a capacity of industrialization the best how did they produce it by industrial policies that create assets that were not there copying obviously also the knot by everybody has copied England a friend's copied England England was copied by United States United States were copied by Japan and then not so on so copying and then learning that's the the the two dimension I would say identification of existing assets very often local and the second is creation of assets when you think they are important comparative competitive elements and in fact digitalization has a lot to do with the second Mario that's very extremely I mean I thought extremely perceptive observations about capacity and assets and how to build and cultivate them at something that you know I think it's going to be more important now than than ever I would say I have a question now he came for Stephen but this is not fortunately not on cg bottles so this is about a question comes on gender and youth and I thought I might ask you this question because UNEK has been doing so much work on this that we know that the fact of the COVID has been particularly detrimental on women compared to men there's also been the question of youth unemployment that's come up and so the question is first that what can we do about it and then there's a question linked to that that can the FCFTA help that's a tough one I'm not sure whether we can think about the link between the FCFTA and issues on youth and gender and women but if you could think a bit more about this and if you could respond especially if UNEK has been doing some work we're good to know about that also okay no thank you I think I tried to I I had answered part of that question online but let me say the following when the leadership of the continent met on December 5th to prepare for the start of trading on January 1 this year one of the things that was agreed then was that we are going to have an African Union protocol of women in trade now and this this this is not rhetoric it's because statistics do show that African women are very much engaged in intra-african trade including some of the units that are used in the backyard to produce to add value to some of the for hair products or for beauty products or whatever there are a lot of women businesses that are involved involved in that and so there is a very intentional policy of ensuring that trade in Africa benefits women so so that's a very practical thing and so we are going to work closely with the CFTA secretariat at the ECA and of course they are the organs of the and anybody who wants to to to help in this to work towards that that's on the that's on the that's on the on the and of course as CCA we actually have a strategy of trade and gender and I'm happy to share to share more on that because we do believe that on the whole question of inclusion I think everybody whenever you think about trade you have to also to think whatever you are working about this this inclusivity for the youth the phase two of the CFTA negotiations is going to tackle the questions of competition policy intellectual property e-commerce and investment policy now I would want to argue and I think this is what I have responded in the in the on the online that first and foremost the e-commerce rules that are going to be developed are going to be very beneficial to the young people in Africa benefiting from digital trade and the digital economy so whatever rules we come up with we have to make sure that they are they are they are you friendly and maybe one of the things that we need to to mention here is that this issue of digital identity becomes very critical and I think indirectly Moses was referring to it because it's one thing being a young person but it's another thing you being a young person trying to trade from Ethiopia with Nigeria and some of the questions whether they can trust you because they do not have an identity your identity but with the digital identity where African countries have a framework that recognizes these things the young people would actually be included the second thing is that the IP rules that are going to be to be there they are going to be very critical to protecting the innovations and the commercialization of the innovations of the young people and even that the young people now will have a whole continent to play with I believe the AFCFTA is going to sort of give a platform to scale up and even to test before you can compete with the best products out there within the continent and and I think this gives a platform to our young people to do this so I don't know whether I have answered that question but that's the way I see it yeah very well Steve it was very clear answer thank you so much okay now actually we are a little bit out of time I'm going to but I'm going to do the following I'm going to ask each of you what would be the one policy priority for African economies this year just one in one minute so one policy priority in one minute that's the challenge so let's start with Moses Moses one policy priority perhaps for the Kenyan government but more generally this year that's a very good one I it would be if we focused on value chain by value chain we are working on discussed resources if I add the power I would say every year start with the market understand the the specs of our market work back once to produce as per the specs of the market build the capacity of the producers and you clear the entire value chain if you did that and you you are able to succeed two value chains every year you make them sustainable within maybe five years we can we can solve a big part of the unemployment challenge thank you that's a great answer thank you so much it's absolutely clear okay Stephen your turn one policy priority this year oh mine is mine is straightforward ratify the CFTA develop a strategy for how to benefit from the AFCFTA and implement that strategy uh it gives you degrees of freedom because you do not have the kind of degrees of freedom that developed countries have of enormous fiscal resources but the AFCFTA is our fiscal resource thank you absolutely that's a very good answer I was going to say the same thing too so it's really ready to be agreed on this Mario one more yes the point is that I agree fully with my two friends so but let me say just to additional point the first is obviously for a sustainable global economic recovery the foremost priority now is to win the battle against the virus everywhere so that's but let me allow that for for a second the ongoing digital and in general productive transformation must be part of a new deal for the global recovery there will not be recovery if this will concern only few countries doesn't matter where they are absolutely thank you okay I'm going to knock on this panel to a close a little bit over time but not very much and all of you are very busy and have other things to do but I just want to thank all of you very you know it was really wonderful the interaction the questions that came from the audience are superb and they are your responses were really really very helpful and I think it's just very good to to think about you know we what we are where we are right now we have quite a bit of a good sense of what the challenges are and also perhaps as we have just discussed now some possible policy solutions which some of which maybe within reason will be a bit more challenging but certainly something we can one can think of doing in the in the next few the next year if not the next few months thank you so much moseley and mario that was a wonderful panel I really enjoyed monitoring it moderating it I look forward to seeing you again whenever well thank you thank you thank you thank you moses thank you thank you