Presidential Dialogue on African Union Financial Institutions; Reforms of the Global Financial Architecture; and the Launch of the Africa Club.

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February 17, 2024

Presidential Dialogue on African Union Financial Institutions; Reforms of the Global Financial Architecture; and the Launch of the Africa Club.

17^th February 2024 | African Union Commission.

Africa's development challenges are multifaceted and require innovative and sustainable solutions. The continent, despite its vast resources and potential, faces economic, social, and environmental challenges that hinder its growth and sustainable development. The global financial architecture, which encompasses international financial institutions, global economic governance structures, and financial regulatory mechanisms, plays a pivotal role in shaping Africa's economic destiny. However, the current system inadequately addresses the unique development needs and vulnerabilities of the African continent.

Despite the continent's promising economic growth in recent years, many African countries still face significant hurdles on their path to progress. The COVID-19 pandemic has exacerbated Africa’s vulnerability to external shocks and its dependence on a global financial system that has not responded to the poly crises, driving many countries into huge debt with constantly shrinking access to affordable credit. The inequities in voting power, decision-making processes, and resource allocation within these institutions have further strained Africa's ability to influence global economic policies in its favor.

Recognizing the urgent need to address these issues and ensure buy-in at the highest levels, His Excellency Nana Addo Dankwa Akufo-Addo, President of the Republic of Ghana and Champion on African Union Financial Institutions, is hosting a Heads of State dialogue in collaboration with the African Union Commission (AUC), the African Multilateral Financial Institutions, the United Nations Economic Commission for Africa (UNECA), and the African Center for Economic Transformation (ACET). During this event, participants will have the opportunity to reaffirm their commitment to establishing AU Financial Institutions; solidify Africa’s Agenda for Global Financial Architecture Reform and agree on a way forward; and officially launch the Africa Club as a key avenue for strengthening Africa’s position in the global financial landscape.

African Union Financial Institutions (AUFIs)

The African Union, Heads of State and Government have long underscored the need to establish an African Monetary Union by harmonizing monetary zones and creating three African Union financial institutions: the African Central Bank (ACB), the African Monetary Fund (AMF) and the African Investment Bank (AIB). Additionally, in January 2006, Heads of State and Government of the African Union requested that the African Union Commission conduct a feasibility study on the creation of a Pan-African Stock Exchange (PASE).

Since the legal instruments to establish the AIB and the AMF were adopted in 2009 and 2014, respectively, none of the financial institutions has reached the requisite number of ratifications to enter into force. In addition, there is inadequate funding for establishing the AU Financial Institutions, which is particularly detrimental to the operationalization of the AMF, which is the first step toward establishing the ACB. The changing global economic landscape due to the COVID-19 pandemic, climate change and insecurity has underlined the need to expedite the establishment of the AUFIs and to revise the legal instruments establishing the AUFIs.

Africa’s Agenda for Global Financial Architecture Reform.

Africa is poised to embark on a transformation journey to help its countries and people reach their fullest economic potential, with a real opportunity to accelerate its evolution as a single market, a valuable player in value chains, and a destination for investment, particularly in the green economy. This progress is unfortunately held back by a global system that was created in a different time, for a different world, and which neither adequately meets African countries’ needs nor harnesses the opportunities that Africa’s natural and human capital offer. It is past time to create a global financial architecture that better serves Africa.

Over the last several years and especially in 2023, African leaders have made growing and unequivocal demands for systemic change, with the support of African institutions and organizations that have outlined several priorities achievable in the short to medium term:

Craft a real solution to the debt crisis.
Provide more grant and concessional money to Africa.
Ensure the re-channel their Special Drawing Rights to African financial institutions.
Increase African voice and power in global decisions and decision-making bodies.
Commit to an ambitious green growth agenda for Africa.

These priorities are by no means exhaustive and are complementary to and reflect priorities from the African Caucus outcome documents, the Nairobi Declaration, the High-Level Working Group on the Global Financial Architecture, asks from the V20 group of countries, and other compelling and necessary demands for action from Africa and other parts of the world. Building upon progress at the World Bank Group / IMF meetings in Marrakech in October 2023, African and global leaders and partners will need to implement a specific roadmap that ties together all of these agendas, with the support of African institutions, global and bilateral development actors, and African policy institutes that can provide the necessary analysis, advice, and advocacy to inform these efforts.

The Alliance for African Multilateral Financial Institutions (AAMFI) – Africa Club

African Multilateral Financial Institutions (AMFIs), which are African owned and African controlled institutions, were created as treaty institutions by African Sovereigns in response to the inadequacies of the global and continental financial architecture. These AMFIs, which include the African Export Import Bank (AfreximBank), Trade and Development Bank (TDB), Africa Finance Corporation (AFC), African Reinsurance Corporation (Africa Re) and African Trade and Investment Development Insurance (ATIDI), have stepped up to support African states during recent times of crisis.

These institutions have broad ownership and participation by African states and have had a growing impact on financing and investment in the continent since their establishment. Collectively, AMFIs now hold assets more than US$53 billion, attracting equity investment of over US$8.6 billion, primarily from African countries, to support African growth and resilience. AMFIs are among the leading supporters of African integration through trade, investment, and infrastructure financing to help implement the AfCFTA and Agenda 2063.

To strengthen and support Africa’s position in an evolving global financial architecture, the AMFIs must increase collaboration and coordination. It is to this end that African Multilateral Financial Institutions have come together to establish the Alliance of African Multilateral Financial Institutions (AAMFI), or more simply, the Africa Club.

The Africa Club aims to bring member institutions together to find solutions to financing challenges and help support Africa’s sustainable economic development and integration objectives, in line with their respective mandates and the development objectives of their member states. Membership of the Africa Club will be open to all African Multilateral Financial Institutions that are aligned with the objectives, purposes, and criteria of the Club.

Expected Outcomes of the Presidential Dialogue.

Renewed commitment for establishment of the African Union Financial Institutions.
A united and strong collective vision for the Global Financial Architecture Reform owned and endorsed by African Heads of State, with an accompanying Action Plan for implementation.
Launch of the Alliance of African Multilateral Financial Institutions’ Africa Club;
Call upon Member States to collaborate with African Multilateral Financial Institutions to identify strategic investment opportunities that align with national development goals.
Signal to the world that Africa’s positions are clear, achievable, and necessary, and that the continent stands together in insisting on reforms that work for Africa.

Participations at the Presidential Dialogue.

The event will bring together a diverse group of participants, including:

Heads of State and Governments.
Finance and Economy Ministers.
Central Bank Governors.
Ministers of Foreign Affairs.
African Multilateral Financial Institutions.
Regional Economic Communities.
African Think Tanks and Policy Institutes.
International Organizations and Development Partners.
Civil Society and Media.

Learn more about the African Union Financial Institutions here.

For further information, please contact:

Ms. Doreen Apollos | Communication | Directorate of Information and Communication| African Union Commission | E-mail ApollosD@africa-union.org 

Dr. Patrick Ndzana Olomo | Development, Trade, Tourism, Industry and Minerals | Department African Union Commission | E-mail: Olomop@africa-union.org

Ms. Rumbidzai Manhando | Development, Trade, Tourism, Industry and Minerals | Department African Union Commission | E-mail: | ManhandoR@africa-union.org