The African Development Bank (AfDB) has urged central banks on the continent to act quickly by cutting interest rates to inject liquidity in view of impact of COVID-19 pandemic.
The AfDB gave the advice in its African Economic Outlook 2020 supplement amid coronavirus pandemic released on Tuesday.
The bank said the targeted interventions should be implemented for affected firms and sectors and use macroprudential and unconventional monetary policy to support the economy.
It stated that central banks could resort to their own forms of quantitative easing, targeted at funding the most affected sectors such as firms in the hospitality and entertainment industry.
According to AfDB, other sectors to be assisted are airlines, hotel chains, logistics and sports by temporarily reprofiling or restructuring their debts.
It added that the apex banks could also support vulnerable groups by designing programmes targeted at micro enterprises and the unbanked in the informal sector, financed by government and potentially run by other agencies closer to the ground.
“The impact of COVID–19 on Africa’s labour markets will have disproportionate impacts on vulnerable groups, notably youth and women, who are engaged in the informal sector, or with only casual job opportunities in the formal sector.
“Assist vulnerable groups, especially youth and women. The COVID–19 pandemic can have differentiated socioeconomic impacts,” the AfDB added.
