President Nana Addo Dankwa Akufo-Addo has urged Member States of the African Union to work to reform the global financial architecture, as well as strengthen the Union’s financial institutions to spur up growth on the continent.
Delivering a report to the Assembly on Sunday in his capacity as the AU Champion for Financial Institutions, President Akufo-Addo said the AU was establishing four financial institutions (AUFIs) — the African Central Bank (ACB), the African Investment Bank (AIB), the African Monetary Fund (AMF), and the Pan African Stock Exchange (PASE).
The President said the major challenge towards the establishment of the AUFIs was the slow rate of ratification of legal instruments and the limited capacity of member states to finance the establishment of the AUFIs.
“Regrettably, none of the AUFIs has reached the minimum number of ratifications required for the enabling legal instruments to enter into force and, thereby, facilitate their substantive establishment,” the President indicated.
That, he explained, was detrimental to the operationalisation of the African Monetary Institute, which is the first step towards the establishment of the African Central Bank.
President Akufo-Addo, thus, presented a number of recommendations to the AU Assembly for its adoption and endorsement, which, he said, “would be critical towards the establishment of the AUFIs.”
On SDR re-allocation, the President recounted that, last May, in Paris, world leaders committed to allocate the historic SDR 650 billion issuance to IMF Member States, with Africa’s quota allocation of 5% or SDR 33.3 billion.
“We value this commitment to additional resources of which our continent is in dire need. It is unfortunate, however, that the only proposal that has been put on the table by the European countries so far is to re-channel these SDRs through only one institution, the International Monetary Fund (IMF).
“The IMF should not be the sole beneficiary of such rechannelling. We believe that our own continental institutions, such as the African Development Bank (AFDB) and Afreximbank, should be recipients of the recycling of these SDRs. Our Finance Ministers and the United Nations Economic Commission for Africa (UNECA) have advocated for the use of regional development agencies to be included in this rechannelling,” he said.
President Akufo-Addo said African Finance Ministers, with UNECA, have consistently championed the allocation of SDRs to capitalize AfDB and AfreximBank, to help establish an African Stability Mechanism, and to initiate a Liquidity Support Facility (LSF).
“We need to guard against the continuing consequential stranglehold of the rating agencies, which has affected the cost and access to capital markets for African countries, and has, during this COVID period, resulted in the downgrading of many African countries, exacerbating even more their funding challenges,” President Akufo-Addo said.
He, thus, urged the AU Assembly to urge G20 leaders stick to their commitment to reallocate to Africa the SDR $100 billion agreed to at the Paris Summit in May 2021.
Rex Mainoo Yeboah, ISD
