Africa needs strong financial institutions — Finance Minister
The Minister of Finance, Dr Mohammed Amin Adam, has emphasised the importance of robust financial institutions in guiding Africa’s journey into the global marketplace.
Speaking at a high-level roundtable on the sides of the ongoing International Monetary Fund (IMF)/World Bank Annual Spring Meetings in the United States capital, Washington D.C., the Finance Minister stated that without stronger regional institutions and strategic reforms, Africa's global financial influence would remain limited.
Focus
The roundtable was on the theme: "Africa's Agenda for Financial Architecture Reform: Priorities for 2025". It was hosted by the Africa Centre for Economic Transformation (ACET), in collaboration with the African Union (AU) and the United Nations Economic Commission for Africa (UNECA), at the George Washington University’s Elliott School of International Affairs.
The meeting provided a platform for the African leaders and partners to reflect on the continent’s progress in driving reforms to the global financial architecture, while charting a path forward.
Discussions centred on leveraging the African Union’s new G20 seat to champion reforms, strengthening harmonisation efforts within Africa, and exploring innovative financing options to drive sustainable growth.
Addressing the gathering of African ministers and development partners, Dr Amin Adam stressed that Africa’s future economic strength rested on the continent’s capacity to establish institutions that could effectively compete on the global stage.
He called for the formation of an African central bank and an African investment bank, emphasising that those bodies would provide the much-needed institutional framework to enable the continent to compete globally and negotiate more effectively.
“We need these institutions to lead Africa into the global marketplace,” Dr Amin Adam stated, urging African leaders to intensify efforts towards building a credible voice in global financial negotiations.
Infrastructure gap
The Finance Minister also addressed the pressing issue of Africa’s infrastructure gap, which remained a major impediment to economic growth and sustainable development.
He expressed the need for increased financing to meet the continent’s extensive infrastructure needs, cautioning that Africa’s current resources were insufficient to tackle those challenges.
"We need more financing to address the huge infrastructure gap," Dr Amin Adam stressed, and added that while the continent possessed abundant natural resources such as land and sunshine, those assets were currently not being factored into global debt metrics to justify lower borrowing costs for African nations.
The Finance Minister contrasted the cost of capital for developed nations with that faced by African countries, arguing that the current risk perception of African economies must be re-evaluated to create more room for affordable borrowing.
“The developed world borrows at a cheaper cost of capital, while Africa’s rich resources are not adequately factored into global debt metrics,” he stated.
Dr Amin Adam added that closing the gap would require a concerted effort to change how international financial institutions viewed and assessed risk in Africa.
His assertions come amid growing calls for greater African representation and influence within international financial institutions.
Africa’s recent success in securing a permanent seat at the G20 was noted as a significant milestone, and participants in the forum discussed ongoing efforts to secure a third seat for sub-Saharan Africa on the IMF Executive Board.
Dr Amin Adam, however, stressed that those gains had to be accompanied by strengthened regional cooperation and harmonisation of trade and financial policies, in order to be fully effective.
Reflecting on the importance of building a cohesive African voice, he declared, “We must participate actively in the international marketplace, but we also need to start from home by creating stronger institutions that will bring us to par with other global players.”
Dr Amin Adam added that Africa’s existing sovereign and pension funds must be leveraged strategically to drive continental growth rather than being invested abroad, where they contribute to the growth of other economies.
Dr Amin Adam also touched on the importance of enhancing Africa’s debt restructuring processes, stating that prolonged negotiations often hampered economic recovery and growth.
Supporting views
The AU Commissioner for Trade and Industry, Albert M. Muchanga, said with the admission of AU into G20, Africa was not only on the table, but also at the table.
He advised that if Africa wanted to be strong abroad, it had to be strong at home, stressing the need for harmonisation and for Africa to have its own credit agency.
The Director of the Macroeconomic Policy, Forecasting and Research Department of the African Development Bank, Dr Hanan Morsy, also corroborated the positions, emphasising consensus building and the importance to have a common African voice.