The African Union (AU) is calling for the creation of a Pan-African credit agency. The chair of the AU, Senegalese President Macky Sall, says the current international credit ratings are proving unjust to African countries.
The continent is seeking new and urgent sources of financing as the impacts of the Ukraine conflict threaten to worsen an already dire economic situation caused by COVID -19.
Senegal’s President Macky Sall says some African countries are failing to recover economically because low credit ratings are discouraging international trade and investment.
“The ratings pose a problem in terms of the perception of the risk which is greater In terms of what is real and this makes credits more expensive and therefore undermine our competitiveness.”
He says Africa must review its relationship with international financial institutions that he terms as imposing “arbitrary conditions on Africa.”
President Sall adds, “We are not really talking about aid. We are talking about partnerships for Africa at least to improve those conditions for loan access and credit market access at the same conditions that are being reserved for those developed countries.”
The President was adding his voice to that of the council of ministers meeting here in Dakar. They are asking the International Monetary Fund (IMF) to give countries more time to repay their loans, and also suspend the debt of others.
The meeting here is also asking the IMF to consider making new lending facilities available for Africa, targeted specifically at helping the continent money fast.
The Union is also asking that the IMF considers availing new lending facilities for Africa targeted specifically at assisting the continent to get liquidity urgently. This is in addition to the demand that Africa alone gets up to 650 billion dollars in Special drawing rights.
But even with the push for external funding, the UN Economic Commission for Africa says because of COVID-19 and now the impact of Russia and Ukraine poverty levels are increasing on the continent.
Executive Secretary of the UNECA, Vera Songwe says, “We must increase and strengthen domestic resources. How can we do that? we have already spoken on many occasions about that, but we haven’t succeeded in getting to 30% of internal revenue mobilisation. But now, we see that there are opportunities with digitalization. We are talking about Egypt, Ghana, Zimbabwe, Mauritania, Burkina Faso – countries have already begun seeking the advantages of this digital economy.”
And civil society insists that the finances being sought must prioritise young people. Desire Assogbavi is the Francophone Africa Director of the One Campaign.
“Every year between 9 and 12 million people come into the job market in the continent but only about 3 million are covered by the institutions that exist now so the others fall into unemployment or indecent employment so it is important that ministers commit to create more jobs for African people.”
Some delegates here are asking 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 financing. But that’s an idea that will need to gain more traction before it becomes a reality.
