On Sunday, at the Fifth Mid-year Coordination Meeting (5thMYCM) of the African Union (AU) in Kenya, leaders of the continent took turns to condemn what they described as an “unbalanced” global funding system and called a major reform in development financing architecture.
Setting the tone for other speakers, the Chairperson of the African Union Commission, Moussa Faki, charged Africa to come up with its independent common “position on development financing” just like other pressing issues such as global trade, climate change and conflict resolution.
Faki picked development financing as a priority on the agenda of the meeting, attended by heads of regional economic communities (REC), heads of state, other political office holders and representatives of regional development partners.
“We need to ensure that there is reform in international financial governance,” the chairperson and long-term advocate of a global financial system that serves the interests of Africa, told the audience.
He regretted that despite the effort made by G-22, Africa is yet to be included in the global financial governance. But the “resistance” to give the continent its fair representation, he said, should concretize the resolve to continue to fight for a more balance system.
But according to Faki, Africa’s search for a sustainable financing model may not come until the continent begins to explore its inert potential. He pointed out the recourse to external partners for over 60 per cent of funding of African self-determination programmes as a “flagrant contradiction”.
The AUC chairperson also pointed at another disconnect between the campaign for freer intra-Africa trade as represented by the African Continental Free Trade Area (AfCFTA) and the obvious disregard for the protocol of freedom of movement of people in the continent.
Reasonable progress has been made in regional integration, Faki admitted. But he argued that there are still deep-seated structural constraints that must be addressed to achieve faster progress in the negotiation.
According to the African Visa Openness Report 2022, 32 countries in the continent still require nationals of at least half of the African countries to obtain a visa before travelling.
Reducing the number, the report said, would make the continent significantly more open and increase the volume of trade among African countries.
Kenyan President and chief host of 5thMYCM, William Ruto, who claimed that his country was the ancestral home of humanity, said his administration “is having a conversation on whether those returning home need visa”.
Ruto assured the gathering that they may not need visa the next time they would visit Kenya as he engaged the audience on the need to build stronger ties across Africa in line with the single market and Agenda 2063 visions.
Corroborating Faki’s position, Ruto was worried that African governments spend $70 billion yearly to service their $640 billion debts. The cost of debt funding would be lower than half if there were a fair global financing template that allow Africa to the same interest others pay. According to him, African countries pay eight times the average interest rate paid by their counterparts across the globe.
“We are not asking for special treatment for Africa. All we are asking is that all of us should be treated equally. We need a financial system that treats everyone equally… If we have a fair financial system, we will be paying less than half of what we currently pay to service debts,” the Kenyan leader said.
He also took on another thorny issue that has raised concern about the commitment to the African self-reliant dream. He wondered why AU would continue to rely on external partners for 60 per cent of the funding of its ambition, which is at variance with the agenda of some of the partners – a contradiction he said must be tackled head-on.
According to him, Africa needs a fit-for-purpose AU. Self-funding, he said, is the conscience of building such an organisation as “a chronic dependence on external funding is inconsistent with the ideals of AU”.
Pan African Review had reported that the joint sitting of the Sub-Committee and the Committee of Fifteen Ministers of Finance Experts (F15 Experts) which was concluded on May 31, 2023 has capped members’ contributions to the 2024 budget at $200 million, a decision that would increase the proportion of the budget funded from external sources. Ruto said a significant departure is necessary to achieve a sustainable funding.
The AU Chairperson, Azali Assoumani, called for a more aggressive investment in common infrastructure that is required to achieve the single market agenda of the continent. Particularly, he pointed out, maritime infrastructure, “given its potential”, is critical to achieving intra-African trade goals.
Assoumani described AfCFTA as a game-changer and called on countries that are yet to submit their instruments of rectification to do so, saying: “The progress recorded in the past six months is a signal that we achieve the ambitious goal”.
As Africa charts a new course to its developmental agenda, Amina Mohammed, the Deputy Secretary-General of the United Nations (UN), promised the “full solidarity” of the organisation. She added that the UN is committed to Agenda 2063, which negotiates a path for a more dignifying position and a stronger voice for the continent on the global stage.
“We may appear down but far from out,” Muhammed noted as she inspired African leaders to throw their hat into the struggle for socio-economic emancipation of the region and wean national governments from the shocks of the global economy.
