AT a key summit in Nairobi this week, campaigners warned that Africa is being crippled by costly loans and unfair interest rates, demanding a rebalance of global financing to support the continent’s development.
‘Africa is at a very crucial moment of its development,’ said Desire Assogbavi of the ONE campaign, a global NGO dedicated to fighting poverty and inequality. Assogbavi was in Nairobi for the annual meeting of the African Development Bank (AfDB), which estimates that the continent’s average economic growth in 2023 fell to 3.1 percent, down from 4.1 percent the previous year.
High food and energy prices, political instability, and climate shocks were contributing factors to this slowdown. Despite these challenges, the AfDB, which celebrates its 60th anniversary this year, expects growth to pick up starting in 2024.
Campaigners like Assogbavi argue that for this growth to materialise, lending structures must be updated to provide African economies with access to less costly investments and loans.
‘Lending bodies such as the World Bank and the International Monetary Fund were created 80 years ago with the post-WWII Bretton Woods agreement, at a time when most African countries did not even exist,’ Assogbavi told French broadcaster RFI. He emphasised the need for a more understanding approach to African economies, similar to that of the AfDB and its Africa Development Fund, which has been operational since 1974.
‘The continent should tap into all options to finance its development, including the AfDB’s fund,’ Assogbavi added. The ONE campaign is calling for the fund to be replenished to the tune of ‘at least $25bn.’
The week-long AfDB annual meeting, themed Transform Africa, could influence global economic policies for years to come. There is an urgent need for reforms to the ‘unjust’ global financial system, which African leaders say penalises African nations with high borrowing rates.
Kenya’s President William Ruto, speaking at the summit, highlighted the vast financial resources needed by governments across the continent. ‘We face the rigid barrier of a global financial architecture that is fundamentally misaligned with our aspirations,’ Ruto said. He complained that African countries are forced to borrow on capital markets at rates far above those paid by the rest of the world, ‘often up to eight to 10 times more.’
African countries frequently struggle with crippling levels of debt to fund their development, as well as unstable exchange rates. Demands for a fairer global economic and financial system are coupled with a drive to transform the AfDB itself.
‘Decisions are very positive so far,’ Assogbavi told RFI, noting various encouraging finance collaborations for the development world. ‘The new strategy of the bank has been unveiled … and we’ve seen the priorities within that strategy match very well with the most pressing need of the continents.’
Assogbavi added that African countries must push for their most pressing needs to be met. First off is a stronger agricultural sector, and second is the industrialisation of agricultural businesses.
The AfDB predicts the continent’s overall economy will expand by 3.7 percent this year.
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