The African Development Bank expresses concerns regarding the sluggish and challenging debt resolution mechanism for Ghana and other debt-distressed African countries.
According to the Development Bank, although the G20 framework on debt resolution has helped alleviate the crisis by aligning official creditors and other commercial lenders, the debt treatment process has been arduous.
During a press briefing at the 59th AfDB Annual Meetings in Nairobi, Kenya, Dr. Akinwumi Adesina, President of the African Development Bank Group, advocated for a reform in the global financial architecture to enhance debt resolution mechanisms for Africa.
“I understand it takes a long, it’s a very difficult process because you have Paris club members, you have non Paris club members, and you have commercial lenders and their needs are quite different from those of official creditors. But it’s helped, it’s helped with Chad, it’s helped with Zambia, it’s helped with Ghana, and it’s working also on Ethiopia in putting together the various credit committees that said that process, everybody agrees, is too slow,” Dr. Akinwumi Adesina said.
Expanding on his point, the President of the African Development Bank referenced a historical event from the 1990s. During this time, numerous African nations participated in multilateral debt relief initiatives like the Highly Indebted Poor Countries (HIPC) initiative.
However, due to their inability to effectively negotiate debt treatment options, many of these countries lost a decade of economic progress.
Using his personal analogy of hemorrhage, Dr. Adesina intimated that “You know, if you’re going to, if you have to help somebody that is bleeding and you want to save their life, stop the bleeding faster, because by the time that you actually do it, they may be dead.”
“So what you find African countries asking for is a speedier implementation and execution of those global mechanisms to deal with the issue of debt.”
The 59th annual meeting of the African Development Bank is focusing on “Africa’s Transformation, the African Development Bank Group, and the Reform of the Global Financial Architecture” which AfDB belives will create a platform to dialogue on the issues confronting the many African economies while examining the structural reforms required in the International Financial Architecture.
In the upcoming days, leaders of governments, central banks, and various multilateral institutions will gather here to discuss pressing issues facing the African economy.
This meeting, mandated by the African Development Bank, will also involve stakeholders assessing the Bank’s performance in the past year and strategizing for the future, potentially making crucial decisions supported by resolutions. Climate concerns will be prominent on the agenda, with the AFDB emphasizing the importance of climate adaptation and increased financing for agriculture to foster sustainable growth.