Sunday, June 23, 2024

The need to reform the global financial system that must treat Africa fairly.

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By Presidents Nana Akufo-Addo, William Samoei Ruto and Halainde Hichilema

The conversation on reforming the global financial architecture has often felt more like Africa against the rest of the world, but the tide is turning. Governments north and south agree that there is something fundamentally wrong with the system and it must be fixed. As the leaders of Ghana, Kenya and Zambia, we have first-hand experience of the precarious financial situation facing many African countries, especially when it comes to debt and development finance. And we are all too familiar with the flaws in the system that is in place to confront these challenges.

The current system needs more than just adjustment—it needs an overhaul. Africa must be at the centre of these reforms, but our criticisms have for too long fallen on deaf ears. Now that the world is beginning to listen, we must go beyond criticism and do what is needed for our economic development and emancipation. Several things are critical to this agenda.

First, African leaders must be bold in promoting their ideas and participating when decisions are being made that affect the continent. The three of us have made it clear that we will not sign on to global regulations and agreements that are not shaped with our input.

We are committed to being a strong voice for Africa. We need to ensure that lower-income countries have sufficient access to concessional finance through the World Bank’s International Development Association (ida).

To that end, Kenya has agreed to host the ida21 conference in April and we are working hard to drive the fundraising for this critical form of finance. Kenya has also agreed to co-lead two bodies to tackle the climate challenge in developing countries. The first, in conjunction with the African Union (au), Antigua and Barbuda, Barbados, Colombia, the European Commission, France and Spain, looks at opportunities to tax sectors, activities and transactions that could yield billions in climate finance for the countries most affected by climate change, many of which are in Africa. The second is a coalition of experts convened with Colombia, France and Germany, looking at how unsustainable debt is keeping many developing countries from investing in climate and conservation, and what can be done about it, including innovations like “debt-for-nature swaps”: debt relief in exchange for green initiatives.

Second, Africa must look within for solutions. We must invest our borrowing in the continent’s growth, job creation and revenue generation rather than in consumption that will not pay us back in the long run; make sure development projects are high-quality, priced correctly and finished on time; and start looking to each other as major trading partners rather than overseas.

It is time for a serious conversation about the high cost of capital that burdens Africa, which is based on unfair risk premiums and inaccurate valuation of our economies. Many African countries have assets that are not reflected on our balance-sheets. We have to strengthen African institutions, and we expect those strengthened institutions to assist in valuing our economies correctly, working with international financial institutions to get this right.

The three of us recently helped to launch the Africa Club, an alliance of African multilateral financial institutions that will serve as a powerful negotiator on behalf of the continent, co-ordinate with global financial institutions and leverage African countries’ balance-sheets to increase investment and jobs. It is critical that these institutions have the full weight of au member states behind them and the appropriate capital to continue serving Africa’s development. To this end, Ghana has proposed that each African country go beyond its existing paid-in capital and invest a minimum of 30% of its sovereign reserves in African multilateral institutions.

Third, we must bring the world to Africa. We have spent the past few years attending summits in a variety of countries that want to do business with our continent. Now it is time for our fellow world leaders to come to us. In that spirit, Ghana has proposed, and we all support, an annual African Economic Summit involving heads of state and government from around the world. Our hope is that this becomes the fulcrum around which we will deal with our major growth-and-development issues. Kenya will host the first summit in 2025, then Zambia in 2026 and Ghana in 2027.

Finally, we must speak with one voice on our reform agenda. Over the past three years a coalition of African policy institutes, the au, the un, finance ministers and civil society have been working together to define and advocate a collective African agenda for improving the global financial architecture. This coalition has identified key areas for action. They include charting a green growth-and-investment path for the continent; increasing concessional finance; channelling special drawing rights currently held at the imf to African financial institutions so they can be leveraged for development finance; finding a robust solution to the debt crisis, which will require overhauling the Common Framework, a debt-restructuring blueprint introduced by the g20 in 2020; and increasing Africa’s role in global decision-making.

These are ambitious but achievable targets. We have already seen progress, for example in gaining a seat for the au at the g20, making it the g21. It is up to Africa to use that seat wisely and present a clear vision for global reform.

There is a line in scripture: “Faith without works is dead.” You cannot believe in something and do nothing about it. 2024 is the year to move from talk to action, and to insist on a fairer global system that works for Africa.

Nana Akufo-Addo is the President of Ghana. William Samoei Ruto is the President of Kenya. Hakainde Hichilema is the President of Zambia.

23 COMMENTS

  1. Begger mentality…we just need to deal with corruption and looting….this is the main problem facing All African economies…African leaders amass wealth in a short period of time…lets stop rushing to the IMF and begging for handouts….we have plenty resources as Africans and if we work together as a continent then we won’t be going to the IMF or World Bank with a begging bowl

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  2. LT give us some background to this I.e. what are the current flaws in the system that disadvantage African countries as compared to the rest of the world? It paints a better picture of the story you’re narrating

    • Why only the three? It could have carried more weight if more presidents had signed.
      Where are Kagame, Museven, Chakwera, our aunt in Tanzania and the rest?

  3. You can’t fix what you haven’t initiated. The EU has expanded eastwards to include more countries and have their own currency. Members insist on trading using the Euro. They’ve weaned themselves from the dollar. You can’t propose to fix what’s working for them if you’re not a member. We had the PTA Bank and I once used their traveller’s cheques. Have we interrogated why it didn’t work for us? That’ll be a clever approach than to point out how other systems disadvantage us. The trio look clever but the opposite is true

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  4. These institutions, IMF and the World Bank, where made by great main by looking ahead in the future to helping other countries to achieve certain goes in their economic endeavors. The problem is neither with IMF nor World Bank, but with ourselves. what we do with the borrowed moneys is our problem number one.
    Let me ask you a more familiar question.
    Which came first Bank or Government or we might ask ourselves, which came first trade or Government among us people?
    You will see that it is trade, banks and then Governments.
    Lazy human beings are a problem because they want cool money; because they want cool money and that is the problem.

  5. Lend to Africa ??? First ask yourself Is it a credible continent ?? considering the Billions pumped in which seem to disappear into the pockets of the elite

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  6. Blames Games! It has nothing to do with restructuring global financial systems. The wealth in western nations came from individuals taping into their imaginations and turning them into ideas. Then taking baby steps to make ideas into realities. These presidents are best to inspire creativeness. We have raw materials that must be used to create wealth. The formula is very easy – you create wealth with your THINKING. Creating wealth was not for the chosen few in the world. It’s a right given to every human being. It must be left to personal choices or decisions. The minute Africa produces products or technologies to sell to the global markets – It gains power, and the balance of power will change. This is what China has done in the last 40 years.

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    • Most of the money we borrow as African nations is actually our money. The money that our leaders steal and stash in foreign banks and tax havens comes back as loans. When you hear of stolen pensions and insurance money, plundered resources and kickbacks from shoddy investment deals. We’ve a maestro at such deals here in Zambia

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    • We used to laugh at anything Chinese ….talk of who laughs last laughs the best.
      The Chinese just using hand tools created a river to deliver water to a place that had no water.

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    • Independent Observer#

      Bro…. you have passionately talked about self-reliance over the years. We are supposed to be the richest continent in the world in terms of financial power, considering the natural resources we have in Africa…………………….

    • Bakolwe basekana ifipato. China didnt listen to Africans laughing at its products then start crying. It improved the products as Africa continued laughing all the way to the grave. Now China is about to become the world’s biggest economy. This because China believes in itself. Not like Africa whose pechance is to hang on to vestiges of Western colonialism from lawyers’ wigs to KFC’s junk diets. How about putting action to “Stand and sing of Zambia PROUD and FREE?

  7. Finito, HH continues this ground breaking global-financial system initiative with special emphasis for African and other developing economies. This takes HH way into 2031.

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    • Ground breaking ?? Never! the guy breaks more clouds than ground in his quest to become the world’s most travelled president.

  8. This is where we miss the whole point here, these guys are not puppets at all, if you want something from those perceived to have what you what you need to lower yourself first once you get it many people will definitely benefit and yourself will be living like a king. I’m a Chartered Accountant myself, now I saw an opportunity in Zambia that we are lacking IT programming skill. I had to learn this the harder way, I delt with pure racist people from some countries I cannot mention here who called me all sorts of names, but at the end I got the programming skill from them, and my goals are now achieved. If you do not want to lower yourself, you are free to continue but rest assured you will continue suffering and your egos will not take you anywhere. Anyway, nipano tuli .

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  9. I agree with Anonymous. Africa has all the natural resources that the rest of the world is interested in. As producers, we need set the prices of our resources by negotiating as one block and creating one currency.
    Within Africa, we need to go back to bartering, exchanging goods and services like our ancestors used to do.

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  10. The need to reform the global financial system that must treat Africa fairly. This has been the topic of discussion since the 60s when Africa got independent. Its chorussed by all politicians who want to be noticed by journalists. The point is “Stop Yapping! And start acting. Make bold moves towards uniting Africa like the EU members have done. Stop wallowing in the false comfort of one commodity countries selling their one product to the First World. When Africa gets together the North will be stirred. Yes “Faith without works is dead”

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  11. Respect is EARNED not given on the silver platter. The West won’t give up their privilege of controlling the financial system too suit their greed. The only solution is alternative systems such as the BRICS currency. Stand ready to to embrace BRICS currency

    • Better still, come up with our own African currency.
      Start adding value to our ra raw materials.
      We can make our own electric cars. For a start;
      One afrcan country can make chassis, another bodies, another electric cables, another batteries, another motors etc. Send all these to one centrally country to assemble the car.
      Export them to the world and earn cool cash.

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