President Nana Addo Dankwa Akufo-Addo
In a bid to bolster Africa’s financial sovereignty and foster economic development, President Nana Addo Dankwa Akufo-Addo has proposed that a significant portion of Africa’s sovereign reserves currently held in foreign banks be invested in the continent’s financial institutions.
Addressing a Presidential Dialogue on the African Union’s (AU) Financial Institutions during the 37th Ordinary Session of the AU in Addis Ababa, Ethiopia, President Akufo-Addo emphasized the need for African nations to allocate at least 30 percent of their reserves to institutions such as the African Development Bank (AfDB) and Afreximbank.
President Akufo-Addo underscored the importance of strengthening the capital base of African financial institutions to enhance their capacity to mobilize resources for the continent’s development. He highlighted that investing in multilateral institutions like the AfDB and Afreximbank would not only bolster their balance sheets but also enable them to play a more significant role in supporting Africa’s growth trajectory.
Amid concerns over negative interest rates on reserves held in foreign banks, President Akufo-Addo stressed the strategic advantage of boosting Africa’s financial power by directing investments into homegrown financial institutions.
He cited the pivotal role played by institutions like the AfDB and Afreximbank in mitigating the economic impact of the COVID-19 pandemic, underscoring the trust and ownership African countries have in these institutions.
Furthermore, President Akufo-Addo urged African leaders to ratify the decision to designate Afreximbank as a specialized agency of the AU, signaling a commitment to enhancing intra-African trade and economic cooperation.
He called for a collective effort to monitor the utilization of funds invested in Africa’s financial institutions to ensure transparency and accountability in financial management.
The dialogue, spearheaded by President Akufo-Addo, brought together key stakeholders including AU leadership, policy institutes, and development partners to deliberate on strategies for strengthening Africa’s financial architecture and advancing the continent’s economic interests. The president emphasized the need for comprehensive reforms in the global financial system to address issues such as illicit financial flows from Africa and prioritize African development priorities.
As Africa moves towards establishing the African Monetary Union and solidifying the framework for AU financial institutions, there is growing momentum towards creating a robust financial system that aligns with the continent’s economic aspirations.
The launch of the Alliance of African Multilateral Financial Institutions – the Africa Club – at the AU summit signifies a commitment to enhancing financial cooperation and leveraging the continent’s resources for sustainable economic development and integration.
With the evolving global economic landscape accentuating the urgency for AU financial institutions, African leaders are poised to accelerate the transformation journey and revitalize the financial sector to harness the full economic potential of the continent’s natural and human capital.
By Vincent Kubi