The African Union calls for the creation of a pan-African credit agency.
The union’s chairman, Senegalese President Macky Sall, said the current international credit ratings were proving unfair to African countries.
The continent is seeking urgent new sources of funding as the impact of the Ukrainian conflict threatens to worsen an already dire economic situation caused by COVID-19.
The continent’s financiers are in Dakar deliberating on how to close Africa’s difficult financing gap.
President Sall said some African countries are failing to recover economically because low credit ratings discourage international trade and investment.
“Ratings pose a problem in terms of the perception of risk which is greater compared to reality and this makes credit more expensive and therefore harms our competitiveness.”
He says Africa must review its relationship with international financial institutions which he calls ‘arbitrary conditions on Africa’
“We are not really talking about aid, we are talking about partnerships for Africa at least to improve these conditions of access to loans and access to the credit market on the same conditions which are reserved for developed countries”
The president added his voice to that of the council of ministers meeting in Dakar.
They call on the International Monetary Fund (IMF) to give countries more time to repay their loans and also to suspend the debt of others.
The AU also calls on the IMF to consider making use of new lending facilities for Africa aimed specifically at helping the continent obtain urgent liquidity. This is in addition to demanding that Africa be granted up to $650 billion in special drawing rights.
But even with the push for external funding, the United Nations Economic Commission for Africa (UNECA) says that due to COVID-19 and now the impact of the conflict between Russia and Ukraine, levels of poverty are increasing on the continent.
“We need to increase and strengthen national resources. How can we do this? We have talked about this many times before, but we failed to achieve 30% internal revenue mobilization, but now we see that there are opportunities. With digitalization, we are talking about Egypt, Ghana, Zimbabwe, Mauritania, Burkina Faso countries have already started seeking the benefits of this digital economy,” says Vera Songwe, Executive Secretary of ECA.
Civil society insists that the funding sought must give priority to young people.
“Every year, between nine and 12 million people enter the labor market on the continent, but only about three million are covered by existing institutions. So the others fall into unemployment or indecent employment so it is important that ministers commit to creating more jobs for Africans”, explains the director of the Francophone Africa campaign One Desire Asogbavi.
Some delegates here are calling on the African Union to push to be a member of the G20 so that the continent can have a stronger voice in determining access to finance.
But it is an idea that will have to gain ground before becoming a reality.