Africa Is Pushing For Changes To The “Unjust” World Financial System

Leaders at a significant African economic conference this week in Kenya stated that urgent changes are required to the “unjust” global financial system, which penalises African countries with high borrowing rates.

These requests have become more prevalent as African nations struggle with sometimes unpredictable exchange rates and sometimes crippling debt loads to finance their development.

According to African Development Bank (AfDB) forecasts, the continent’s overall economy would rise by 3.7 percent this year. This is an impressive performance considering the state of the world economy, but it is not enough given the rate of population growth.

Kenyan President William Ruto stated at an official ceremony on Wednesday that governments throughout the continent require enormous financial resources in order to “transform Africa,” which is the focus of this year’s AfDB annual meetings in Nairobi.

He added, “But we are confronted with the inflexible obstacle of a global financial architecture that is fundamentally out of step with our goals.”

Ruto bemoaned the “unjust” system that forces African nations to borrow money at rates far higher than those of the rest of the world—”often up to eight to ten times more”—on the capital markets.

Following years of limitations on accessing global markets, Kenya, a prominent regional economy, managed to raise $1.5 billion in February through a new Eurobond with interest rates of approximately 10 percent.

Currently, the yield on French government bonds with a maturity of 10 years is approximately three percent.

Akinwumi Adesina, the head of the African Development Bank (AfDB) and a native of Nigeria, also questioned the “so-called Africa risk premium,” which required African states to borrow money at higher interest rates than other countries with comparable credit ratings.

According to the UN Development Programme, he said during a news conference on Monday, “If Africa’s risks are adequately and honestly appraised… Just paying off their debts will save African nations $75 billion annually.

In addition, the Nigerian economist stated on Wednesday that despite numerous “headwinds,” real gross domestic product growth in Africa was predicted to climb by 3.7 percent this year and 4.3 percent in 2025. This comes after a gain of 3.1 percent in the previous year.

Ruto, however, cautioned that “the pace of African development remains far behind its undeniable potential.” Ruto has been leading African proposals for changes to the global financial system.