President Nana Akufo-Addo has urged African leaders to guard against the continued power of rating agencies over African economies.
The credit ratings assigned by these rating agencies, he described, have affected the cost of borrowing and access to international capital markets.
Speaking at the African Union meeting in Addis Ababa, Ethiopia, President Akufo-Addo tasked African leaders to help reform the global financial architecture.
“We need to guard against the consequential and continued strangulation of rating agencies which has affected the cost and access to capital markets for African countries. It has during this period of COVID-19 resulted in the downgrading of many African countries, further exacerbating their funding difficulties.”
“Furthermore, it is of the utmost importance that G20 leaders deliver on their pledge to reallocate the SDR 100 billion they earned to Africa, made at the Paris Summit in May 2020,” he said. -He underlines.
President Akufo-Addo continued that the IMF should not be the sole beneficiary of such a shift, noting “we believe that our own continental institutions, such as the African Development Bank (AfDB) and Afreximbank, should be the beneficiaries recycling of these SDRs. Our finance ministers and the United Nations Economic Commission for Africa (UNECA) have called for the use of regional development agencies to be included in this reorientation.
He also told the Assembly that African finance ministers, together with the ECA, have always championed the allocation of SDRs to capitalize the AfDB and AfreximBank, to help establish an African stability mechanism and to launch a support facility. to liquidity (LSF).
The President of the Republic of Ghana advanced his argument that “we [African leaders] must work collectively as the African Union to reform the global financial architecture even as we build and strengthen our financial institutions”.
According to the President, this will solve the financial problems of some African countries.
According to the President, “The main challenges to the establishment of AUFIs include the slow pace of signing and ratifying legal instruments, and the limited capacity of Member States to fund the establishment of AUFIs. Unfortunately, none of the AUFIs has reached the minimum number of ratifications required for the enabling legal instruments to enter into force and, therefore, facilitate their substantial implementation.