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African leaders have finally laid out the blueprint for the financial architecture that many of the continent’s political bigwigs and economists have been calling for, clearly painting the picture that has been at best a silhouette in recent years.
Over the past two years, leaders on the continent, as well as civil societies and economic think tanks, have raised concerns over how the international financial architecture is designed, saying it does not work for Africa.
The concerns arose in the aftermath of the recent multiple global crises that drove many African economies to their knees, with many sliding into a high risk of debt distress or default altogether, and government borrowings hitting record highs for many nations. Africa’s debt stood at US$1,152 trillion as of December 2023, which is about half of the continent’s GDP, according to latest figures by the African Development Bank (AfDB). This has been heightened by recent economic shocks.
“The issue is, African countries are facing a lot of challenges, in particular, the issue of liquidity. And this comes up because a number of shocks have hit African countries, starting with the Covid-19 pandemic and lockdowns, and then the Russian-Ukraine war,” explains Prof Victor Murinde, executive director of the African Economic Research Consortium (AERC). In the aftermath of these shocks, three African countries – Zambia, Ghana, and Ethiopia – have since defaulted on their debt, and 10 others, including Kenya and Rwanda, have slid into a high risk of debt distress as state loans soar to unsustainable levels. – The East African
Bongani Ndlovu
Online Reporter