President Akufo-Addo has suggested that 30 percent of Africa’s sovereign reserves, which are currently held in foreign banks, should be invested in the continent’s financial institutions.
This proposal aims to promote economic growth and development within Africa by ensuring that a significant portion of its financial resources remains within the continent, rather than being held abroad.
President Nana Akufo-Addo made this proposal during a Presidential Dialogue on the African Union’s (AU) Financial Institutions, which took place on the sidelines of the 37th Ordinary Session of the Assembly of the Heads of State and Government of the AU in Ethiopia.
“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.
“Strengthening the capital base of those banks was a necessity to enhance their balance sheet and boost their capacity to facilitate more and more resources for the continent’s development and growth, he argued.
President Akufo-Addo highlighted that most countries hold their reserves in foreign banks, where they often earn minimal or negative interest rates.
“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.
Regarding the importance of investing in the continent’s financial institutions, President Nana Akufo-Addo emphasized the crucial roles played by the African Development Bank (AfDB) and the African Export-Import Bank (Afreximbank) in mitigating the impact of the COVID-19 pandemic on the people of Africa.
“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.
President Nana Akufo-Addo also urged African leaders to seriously consider ratifying the decision to designate Afreximbank as a specialized agency of the African Union (AU). The Presidential Dialogue, initiated by Ghana’s President, was attended by AU leadership, African policy institutes and financial institutions, as well as development partners.
As an advocate for reforming the global financial system, President Akufo-Addo stressed the need for a mechanism to monitor the use of funds invested in African banks.
“This is critical for ensuring that we get proper accountability,” he said.
The President urged leaders to collaborate in developing a robust global financial architecture that prioritizes African development needs. He emphasized the importance of reforming the global financial system to address issues such as stemming illicit financial flows from Africa.
In recent times, African Union Heads of State and Government have intensified efforts to establish an African Monetary Union by harmonizing monetary zones and creating three AU financial institutions: the African Central Bank (ACB), African Monetary Fund (AMF), and African Investment Bank (AIB), along with the creation of a Pan-African Stock Exchange (PASE).
The concept note for the Presidential Dialogue emphasizes the urgency of establishing these AU financial institutions and revising the legal instruments governing them, given the evolving global economic landscape.
Africa’s transformation journey requires a global financial system that meets the people’s needs and leverages the continent’s natural and human capital.
Additionally, the 37th Ordinary Session of the AU will witness the launch of the Alliance of African Multilateral Financial Institutions – the Africa Club. This initiative aims to unite member institutions to address financing challenges and support Africa’s sustainable economic development and integration goals.