President Akufo-Addo has suggested allocating 30 percent of Africa’s sovereign reserves, currently held in foreign banks, to be invested in the continent’s financial institutions.
During the Presidential Dialogue on the African Union‘s (AU) Financial Institutions, held on the sidelines of the 37th Ordinary Session of the AU Assembly in Ethiopia, President Akufo-Addo highlighted the importance of strengthening the capital base of institutions like the African Development Bank (AfDB) and Afreximbank.
“We should decide that a minimum of 30 per cent of the reserves of each one of us, should, be invested in the multilateral institutions,” he said, citing the African Development Bank (AfDB) and Afreximbank.
The President emphasized that increasing the financial power of African institutions could significantly contribute to financing the continent’s development and growth.
Currently, many countries hold their reserves in foreign banks, attracting predominantly negative interest rates.
President Akufo-Addo urged African leaders to consider ratifying the decision to designate Afreximbank as a specialized agency of the AU.
He acknowledged the critical role played by institutions like AfDB and Afreximbank, citing their contributions during the COVID-19 pandemic.
“The fundamental fact is that, if we find a way that we can increase the financial power of our own institutions, we are in a better place to finance our development,” he echoed.
“These are institutions which are ours, and which we can trust. So, if we can find a way of strengthening them, we strengthen ourselves,” he noted.
While championing global financial architecture reforms, the President stressed the need for a monitoring mechanism to ensure accountability in the utilization of funds invested in African banks.
He called for collaborative efforts among leaders to develop a robust global financial architecture that prioritizes African development and addresses illicit financial flows from the continent.
The recent push by African Union Heads of State and Government for the establishment of an African Monetary Union, including the African Central Bank, African Monetary Fund, African Investment Bank, and Pan-African Stock Exchange, aligns with the continent’s aspirations for economic transformation.
The 37th Ordinary Session of the AU will also witness the launch of the Alliance of African Multilateral Financial Institutions, known as the Africa Club, aimed at fostering collaboration and finding solutions to financing challenges for sustainable economic development in Africa.