Over the past two years, African heads of state, ministers, and policymakers, as well as multilateral institutions and civil society organizations, have coalesced around priority issues and actions to reform the global financial system so that it is both more equitable and more responsive to the needs of developing countries. And with increasing frequency, African stakeholders have been speaking out on these issues with a more unified voice on the international stage, yielding notable areas of progress.
The African Union gained historic inclusion as a permanent member of the G20, which represents approximately 85 percent of global GDP and 75 percent of global trade, according to the World Economic Forum. Sub-Saharan Africa now has a third seat on the IMF’s Executive Board, while there is a clearer pathway for rechanneling Special Drawing Rights from the IMF to the African Development Bank and others. The World Bank is moving toward International Development Association (IDA) replenishment in December that will benefit Africa.
On October 22, ACET convened a ministerial-level dialogue on the margins of the IMF/World Bank Annual Meetings in Washington, DC to build on the recent progress, bringing African ministers and development partners together to consider global financial reform priorities going forward. (Photos: View event slideshow)
“We are here to discuss what has gone right and where we are disappointed,” said ACET President and CEO Mavis Owusu-Gyamfi, urging participants to speak openly and candidly to help chart a joint agenda for the next 12 to 24 months—“a clear and unapologetic agenda for Africa.”
The African Union Commission and the UN Economic Commission for Africa (UNECA) co-hosted the event, which drew more than 60 attendees and featured numerous panelists and discussants from the host organizations as well as the African Development Bank, World Bank, ONE Campaign, AFRODAD, and Alliance of African Multilateral Financial Institutions, among others. Participating ministers included Angola Minister of Finance Vera Esperanca dos Santos Daves de Sousa, Egypt Minister of Finance Ahmed Kouchouk, Ghana Minister of Finance Mohammed Amin Adam, and Madagascar Minister of Economy and Finance Rindra Hasimbelo Rabarinirinarison.
Repeatedly, speakers returned to the topics financial coordination and collaboration between governments and partners, mechanisms for debt management and relief, more targeted and focused engagement with the private sector, and stronger African ownership and oversight of financial markets, especially at the continental and country levels.
“We need to ensure our own capital markets and financial markets are robust,” Ms. Owusu-Gyamfi said, echoing numerous calls for African countries and organizations to use the progress made on regional unity around global finance to look inward to ensure governments are in the best position to capitalize on the global reforms being sought.
“For us to have a stronger voice abroad, we need to have a very strong Africa at home,” said Albert Muchanga, AU Commissioner for Economic Development, Trade, Tourism, Industry, and Minerals. A unified African voice continues to be “the number one priority,” he said. “Right now, Africa is at the table for the G20. That matters a lot.”
The ministers and organizational leaders in attendance spoke frankly to each other on a variety of issues that carry their own unique implications for the ways in which African countries not only can access more finance but also how to make that finance—and related opportunities—more effective in its outcomes.
Minister de Sousa, for example, challenged multilateral development banks to “work together better to unlock regional trade, regional business, and projects that interconnect countries,” put more money in the private sector, and tackle a topic that she said has historically been avoided—local content. “Address the issues holding MDBs back from using local people, local companies, and local banks. Make sure impact of the money available will be bigger.”
The African Development Bank’s Vice President for Finance and Chief Financial Officer, Hassatou Diop N’Sele, spoke out strongly on the scope and quality of the Bank’s efforts and the need for more global funding, not just improved processes. “The reality is that our resources are dwarfed by the needs of low income countries,” she said. “One percent of concessional financing represents one percent of what those countries need to break the cycle of poverty. We are still very, very far from where we need to be.”
Still, participants consistently touted approaches to boost investment and manage debt that relied more on financial innovation and the private sector than the traditional global architecture.
“Having a voice at the G20 is one way to deal with debt,” Minister Kouchouk said, “but we also need to come up with proposals that can be implemented and heard.” He cited Egypt’s recent multibillion dollar debt swap as a way to turn debt into financial opportunities that would appeal to private investors. “We keep talking about debt and using debt, but we need to find other ways to reduce it. We need to continue to do better at presenting our case.”
While agreeing with the prevailing sentiment that African countries first need “to look inward, where solutions truly lie,” Jason Braganza, Executive Director of AFRODAD, built on the points made by Minister Kouchouk regarding the relationship between debt perceptions and actions. “We need to look closely at how we define debt,” he said. “The definition of the problem has been very narrow.” He continued to speak on the importance of a debt service initiative in Africa that improves on the Common Framework “until more robust debt restructuring is achieved.”
Africa’s agenda for financial architecture reform has continued to expand as the continent’s priorities have shifted and solidified. At last year’s IMF/World Bank Annual Meetings in Marrakech, ACET convened ministers and partners to agree on a framework for action and advocacy priorities going into 2024. More formal than this year’s event, that meeting marked a major milestone for bringing a cohesive African voice to the reform agenda. A few months later at the AU assembly, African heads of state and government put forth a clear vision for global financial architecture reform that emphasized the need to simultaneously prioritize the continent’s own financial architecture.
Hanan Morsy, UNECA Deputy Executive Secretary and Chief Economist, said that the progress made in the past year on identifying common goals and strengthening the African voice “changes the conversation. We know and generally agree on what we need. That’s really important at this stage.” Looking ahead, he said, “of course more can be done to amplify in a coordinated way. We have to continue to take charge of our own side, so that when we go to the World Bank or IMF, we are better prepared.”
Ms. Owusu-Gyamfi wrapped up the discussion with the reminder that “if we achieve structural transformation, nothing would be stopping Africa from being the ones giving the advice.”
She noted three core takeaways from the 90-minute discussion: a consensus to do more domestically in terms of policy ideas and solutions to boost investment and address debt; a desire to strengthen collaboration across borders so countries are learning more each other and investing in regional integration; and a broad desire to boost African financial institutions by investing in them and helping them build stronger financial sectors. “We know where we must continue to work next year and beyond,” she said.
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