In Rabat, Morocco
AS consensus on the expected results of the Global Financial Architecture Reform is gradually taking shape, global actors in international cooperation should collectively explore the possibility of establishing a more effective global financial safety net, NewsDay business can report.
This is because such a net would allow for rapid and automatic access to liquidity while reducing investment risk.
The reform refers to efforts to restructuring the global financial system to make it more equitable, inclusive, and better suited to address challenges facing the world today, which include poverty, climate change, and inequality.
Hence, calls for the establishment of a more effective financial safety net come as Africa has been clamouring for a fairer global financial system.
African nations want a system that delivers on the scale of resources needed to allow Africa to achieve its growth and development priorities.
Currently, Africa is facing a financing gap of US$1,2 trillion through to 2030 to achieve its Sustainable Development Goals, as it is failing to provide climate financing to get the continent to adapt.
Speaking at the opening of the three-day AIF Market Days 2024 being held in Rabat, Morocco, on Wednesday, Morocco’s Economy and Finance minister Nadia Alaoui implored African leaders and development partners to strengthen their strategic collaboration.
She also called for them to work more as a system for more impact in the face of the growing African challenges.
Alaoui said these efforts included collaboration on debt risks, high levels of employment, especially among young people, access to energy, food insecurity, climate change, and health challenges.
“I am extremely confident that the AIF, thanks to its gathering role to leverage the existing partnership framework established with our key actors engaged in Africa progress, is stimulating mobilisation of additional resources and thus accelerating the continent's development,” she said.
“At the same time, I commend the work conducted by the key partners group, which has been created by the AfDB (African Development Bank), the World Bank, the UN Development Programme, and the Japanese International Cooperation Agency.”
She thanked these institutions as their combined work increased the leveraged effect of these financial institutions and resources through co-financing cooperation for the benefit of the pro-progress investment projects, particularly the infrastructure sector.
“In this regard, it would also be useful if the international financial institutions could strengthen their collaboration to mobilise more private capital and the aura of affordable private capital in support of public resources, so we can provide more substantial financing to the benefit of the African economy,” Alaoui said.
“It is true that tremendous effort has been made by the World Bank and indeed by private capital, but we must recognise that we still have a long way to go until the private sector can play its full role in reducing the financial gap of the sustainable development goals of our continent.
“Development partners are therefore calling for intensified support for structural reform undertaken at the national level by the African governments in the view of promoting private initiatives and strengthening planning and preparation of well-designed and financially viable projects.”
She said this reform should be accompanied by measures to strengthen macroeconomic fundamentals and improve the business environment.
This, she added, would ultimately change the perception of risk and break down historical prejudices about Africa to allow the financial potential of private actors to be fully explored.
Alaoui said the diversification of international partners had always been one of the strategic priorities of Morocco’s foreign policy, adding that the long-awaited rise of the continent depended intrinsically on individual countries' ability to access the necessary financing to achieve Agenda 2030 for Sustainable Development and the African Union’s 2063 Agenda.
“This aim must collectively improve sustainable financing for development and end on our continent’s potential,” Alaoui said.
“I am deeply convinced that the African Investment Forum 2024 will be a privileged moment in which our common reflection explores innovative solutions to persistent challenges while strengthening a strong partnership to make our aspirations a reality.”
The forum is an initiative of nine development finance institutions.
These are the African Development Bank (AfDB), Africa50, African Export Import Bank, Development Bank of Southern Africa, Africa Finance Corporation, European Investment Bank, Trade and Development Bank, Islamic Development Bank, and the Arab Bank for Economic Development in Africa.