Reform international financial system to benefit African nations — Experts

Speakers at the 9th Annual Meeting on the 2nd global debt initiative have called for a reform of the international financial system to prioritise the needs of African nations and their citizens. 

The speakers were the Chief Country Economist at the African Development Bank (AfDB), Zerihun Gudeta Alemu; Country Representative and United Nations (UN) Resident Coordinator, Zia Choudhury and a British economist, Ann Pettifor.

The speakers highlighted the challenges posed by the current system, including the burden of debt servicing, limited policy space, and the lack of access to affordable finance for development.

They called for a more sustainable and equitable approach to debt management, one that prioritises the needs of citizens and promotes economic justice.

The two-day conference, which opened in Accra last Thursday, was organised by Ghana International Trade and Finance Conference (GITFiC) in collaboration with the AfDB and the United Nations on the theme: “Spurring GITFiC's Global Debt Initiative; Consolidating Member States’ Gains for Synergistic impacts and widening the Scope of Sensitisation on the Africa Continental Free Trade Area.”

AfDB

Dr Alemu stressed the need for a fairer and more inclusive global financial system that aligned with African aspirations.

“Africa needs a system that gives it a stronger voice and the resources required to achieve its development goals,” he said, adding that “today, Africa requires $1.3 trillion to achieve the Sustainable Development Goals and an additional $400 billion to fast-track its structural transformation.”

Mr Alemu highlighted the challenges facing Africa, including climate change, conflicts, and financial volatility, which have led to a complex debt landscape.

He noted that Africa's debt-to-GDP ratio stood at 60 per cent by the end of 2024, with $74 billion needed to service existing debt.

The AfDB, Dr Alemu said, has been supporting its regional member countries to navigate the complex global financial system and global debt architecture.

He highlighted the bank's initiatives, including the establishment of a Public Finance Management Academy for Africa, the African Debt Managers Initiative Network, and the Debt Management Forum for Africa.

Dr Alemu also called for a significant increase in paid-in capital for multilateral development banks, and reforms to the capital adequacy framework to unlock more concessional financing for Africa's development agenda, adding that these reforms could increase financing for Africa by another $5.2 billion a year.

UN

For his part, Mr Choudhury emphasised the need for collective action to address the debt crisis facing African nations.

He stressed that the current debt situation was "one of the biggest and most vocal attacks" on the multilateral system since the founding of the United Nations 80 years ago.

He cited a recent report by the UN Secretary-General's expert group, which revealed that two-thirds of low-income countries are either in or at high risk of debt distress.

Mr Choudhury praised the work of debt campaigners, including Ann Pettifor, who led the Jubilee 2000 Debt Cancellation campaign, which resulted in the cancellation of $130 billion of debt

The UN Resident Coordinator also highlighted Ghana's progress in reducing its debt burden, but noted that significant challenges remain.

Mr Choudhury pledged the UN's support to African nations, including policy guidance, technical assistance, credit rating initiatives, and multilateral coordination. 

Debt campaigner

Ms Pettifor argued that the current international financial system was unfair and benefited creditors at the expense of debtor nations.

She emphasised the need for African countries to shift towards using domestic resources to drive economic growth and development, rather than relying on foreign creditors.