President advocates strong continental financial system

President Nana Addo Dankwa Akufo-Addo has urged Member States of the African Union (AU) to work collectively to create a strong financial system for the continent.

Delivering a report to the AU Assembly yesterday in his capacity as AU Champion for Financial Institutions, President Akufo-Addo noted that the union was engaged in the process of establishing four financial institutions. 

The institutions are the African Central Bank (ACB), the African Investment Bank (AIB), the African Monetary Fund (AMF), and the Pan African Stock Exchange (PASE).

According to the President, “the major challenges towards the establishment of the financial institutions are the slow rate of signature and ratification of the legal instruments, and the limited capacity of Member States to finance the establishment of the institutions. 

“Regrettably, none of the AUFIs has reached the minimum number of ratifications required for the enabling legal instruments to enter into force, and, thereby, facilitate their substantive establishment,” he said

That, he explained, was detrimental to the operationalisation of the African Monetary Institute, the first step towards the establishment of the African Central Bank. 

President Akufo-Addo, thus, presented a number of recommendations to the AU Assembly for its adoption and endorsement.

On the matter of Special Drawing Rights (SDR) re-allocation in the context of optimising its impact on Africa, the President recounted that, last May, in Paris, world leaders made a commitment to allocate $650 billion issuance to IMF Member States, with Africa’s quota allocation of five per cent or SDR $33.3 billion. 

“We value this commitment to additional resources, of which our continent is in dire need. It is unfortunate, however, that the only proposal that has been put on the table by the European countries so far is to re-channel these SDRs through only one institution, the International Monetary Fund (IMF),” he said. 

President Akufo-Addo continued, “The IMF should not be the sole beneficiary of such rechannelling. We believe that our own continental institutions, such as the African Development Bank (AFDB) and Afreximbank, should be recipients of the recycling of these SDRs. Our Finance Ministers and the United Nations Economic Commission for Africa (UNECA) have advocated for the use of regional development agencies to be included in this rechannelling.” 

He told the Assembly that African Finance Ministers, with UNECA, had consistently championed the allocation of SDRs to capitalise AFDB and Afrexim Bank, to help establish an African Stability Mechanism, and to initiate a Liquidity Support Facility (LSF). 

“We need to guard against the continuing consequential stranglehold of the rating agencies, which has affected the cost and access to capital markets for African countries, and has, during this COVID period, resulted in the downgrading of many African countries, exacerbating even more their funding challenges,” President Akufo-Addo said. 

He, thus, urged the AU Assembly to push the G20 leaders to stick to their commitment to reallocate to Africa the SDR $100 billion agreed to at the Paris Summit in May 2021. 

BY TIMES REPORTER

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