Central Bank Governors across Africa have raised alarms about the escalating borrowing costs faced by African nations, highlighting that the continent’s development goals are unattainable at the current rates.
According to The PUNCH, in a push for significant reductions in borrowing costs, the governors plan to present this position at the upcoming International Monetary Fund and World Bank annual meetings, advocating for a unified stance from Africa.
Governor of the Bank of South Sudan and Chair of the Monetary Affairs Committee for the East African Community, Dr. James Garangexpressed this perspective during an interview with journalists at the 2024 African Caucus Meeting, which took place in Abuja on Friday.
The African Caucus, founded in 1963, works to amplify the voices of African Governors in the Bretton Woods Institutions on critical development issues affecting the continent.
Representing all 54 African countries, the Caucus convenes biannually to unify their positions and present them to the IMF and World Bank through a Memorandum.
In the initial five months of this year, Nigeria’s debt servicing amounted to approximately N2.2 billion, according to data from the Central Bank of Nigeria.
This figure is nearly half of the $4.8 billion Fitch Ratings projected for the entire year, with predictions indicating an increase in Nigeria’s external debt servicing by $400 million to $5.2 billion next year.
The Central Bank of Nigeria’s International Payments Data shows that the Federal Government spent the most on debt financing in May, totaling $854.36 million, the highest monthly expenditure in the past year.
In light of the need for fair financing solutions, Dr. Garang emphasized the importance of discussing equitable financing options, reflecting the consensus among African Central Bank governors about the continent’s potential and needs.
He said, “Equitable Financing is one of the issues that will be tackled in the memorandum and also in the declaration. There is a need to reform global financial architecture.
“It revolves around many things but I will just highlight three things. One is there is a need to reduce the cost of borrowing and enhance access to finance and also harmonise policies among ourselves and ensure that the voices of Africa are heard on the table.
“This is the point that we heard earlier, where Ambassador Amina Mohammed was talking about the G20. And also Ambassador Albert Muchanga of the EU Commission. They were talking about what can be done to ensure that Africa sits at the table where decisions around global financial architecture are met. So these are some of the things that are going to be coming up in the memorandum.”
Dr. Garang added that the forum will also address issues related to access to energy, seeking support from international lenders.
He also noted that African Central Bank governors are concerned about the increasing youth population and highlighted that a practical plan would be formulated to tackle this challenge.
“The governors are very conscious about the level of unemployment today in the region and the continent. There is going to be a section in the memorandum that focuses on improving youth employment and opportunities across the board because we have not seen this not just for one country. The governors are very conscious and they will ensure that policies that focus on youth employment will be addressed.
“The other two things will of course be around issues that have to do with access to energy. And this is the area where the African Development Bank and the World Bank are taking the lead role to support the continent,” the governor added.
