Davos: A need for debt relief and new economics

Satellite view of Africa

Day five of Davos saw concerns raised about economic coercion, mounting debt in developing nations, and a return to talk of a different type of capitalism.

Nigeria’s Vice President, Yemi Osinbayo, has called for debt relief for developing nations and warned enough was not being done to provide the necessary finance for development.

Speaking on day five of the Davos meeting of world leaders, Mr Osinbayo welcomed the creation of $650bn of special drawing rights in 2021 but stressed that more had to be done to ensure developing nations could access that money, which presently goes underused.

Nigeria has a huge infrastructure programme underway, investing in ports, rail and airports to strengthen its economic prospects while improving its environmental outcomes. The vice president, however, stressed that all of Africa was undergoing vital economic growth, recovering from the economic impact of the pandemic. With the right investment, he said, Africa can become a major economic force in the world as it adopts technological innovation and invests in social and economic infrastructure.

While Africa has cause for optimism, Scott Morrison – The prime minister of Australia – sees serious challenges across the Asia Pacific.

Speaking in a keynote address, he said that the region was growing highly contested with resource and territorial tensions growing. In contrast to China’s call for greater co-operation at the start of Davos, Mr Morrison said that there needed to be an alignment of liberal and democratic nations to stand ground against economic protectionism, cyber threats and foreign interference.

While he looked at international trade and relations, US secretary to the treasury, Janet Yellen, echoed the Japanese prime minister’s talk of a new economic model.

She said that the Biden government was pioneering a new form of supply side economic policy that had key differences to traditional Keynesian economics. This new model put the increased spending into those areas most likely to drive growth, such as technology, research, and importantly, infrastructure.

Ms Yellen set out the relative success this was helping to generate in economic recovery – with the USA’s jobs market rebounding fast from the downturn caused by the pandemic.