Akinwumi Adesina and African leaders yesterday at the African development bank (AfDB) general meeting criticized the global financial system for trapping some African nations in debt in the face of harsh socioeconomic realities.
At the commencement of the annual general meeting of the African Development Bank (AfDB) in Sharm el Sheikh, Egypt, the African development bank and the leaders declared that a review of the financial system is urgently needed to survive because the international financial institutions have not been fair to the struggle of poor African nations.
Nigeria, however, was noticeably absent from the summit despite having a public debt of somewhere about N70 trillion and a debt-to-revenue ratio close to 100%.
The Nigerian government was not represented at the discussion session of the African development bank (AfDB) general meeting, which had three African presidents seated, The Afdb president Akinwumi Adesina, several Vice Presidents, and dozens of delegates representing various governments, with the exception of the green-white-green flag raised at the corner of the International Conference.
The global financial architecture, according to Dr. Akinwumi Adesina, president of the AfDB Group, is failing developing nations like Africa that are dealing with global difficulties. He also added that the design needs to be changed to better address new realities.
Adesina noted that the Sustainable Development Goals (SDGs) are set to expire in just eight years, and she questioned both the ability of African nations to fulfill the targets and the help they received from the rest of the world.
According to him, the SDGs must be achieved by African nations by 2030 with an annual intervention budget of $1.3 trillion and $144 billion, respectively, to help them recover from the terrible COVID-19 impacts.
The leader said: “Africa is in the circle of COVID-19, climate change and conflicts, putting it in need of more financial resources. On global warming, Africa contributes just three per cent of global carbon emissions, yet it is facing devastating effects that cost it between $7 to $15 billion losses yearly. Africa would need $2.7 trillion to bridge the gap of climate change needs by 2030, yet the global financial architecture provides only three per cent of global climate financing for Africa. Africa receives just $18 billion yearly in climate financing between 2016 and 2019.”
In light of COVID-19, climate change, and the Russo-Ukrainian situation, he continued, it is crucial to address the debt crisis globally, particularly in developing and African nations.
“While the median public debt has reclined to 65 per cent of the GDP, from 68 per cent in 2021, the debt levels are still high. Efforts to restructure Africa’s debts have also changed dramatically. While bilateral debt accounts for 27 per cent of debt compared to 52 per cent in 2000, commercial debt now accounts for 43 per cent of total debt, compared to just 20 per cent in 2000.”
“But, the expansion and fragmentation of these credits complicate their repayments by the Bretton Woods institutions and others. There is, therefore, an urgent need to reform the current international financial architecture to make it fit for in-depth restructuring. Debt resolution in Africa, especially outside the Paris Club processes, has often been disorderly and retracted because of economic consequences. To avoid high debt resolution costs, and to limit the magnitude of debt crisis reemerging, the international community needs to push for enhanced transparency on debt and global coordination among creditors,” Adesina said.
He added that while efforts were being made to ensure the success of the G20’s common framework for debt resolution, they had not yet been successful in the cases of Chad, Ethiopia, Zambia, and Ghana, which asked to have their debts treated under the same framework.
Abdel Fattah el-Sisi, president of the Arab Republic of Egypt, stated that African nations today face global difficulties and effects of the pandemic, the Russia-Ukraine situation, and climate change, all of which were not of their making, and require a collaborative effort to mitigate their effects.
To lessen the burden on African nations, el-Sisi encouraged international institutions to change the terms of public financing for those nations.
However, Moussa Faki Mahamat, the chairperson of the African Union Commission, said African nations should also be critical of what they had accomplished with the decisions made at prior multilateral meetings on African development and the reasons why debts and inflation continued to climb.
Mahamat stated: “This meeting should not be all talks but on strategic efforts to align with the AU’s 2063 agenda on self-sustainability of the continent. The financing targets are good, but they should be more realistic, looking towards institutional reviews to encourage better partnerships through in-country transparency and eradication of corruption.”
