France-Africa summit, Ruto: review financial architecture. Macron: together for autonomy
[Second Title displayed on Homepage]Kenyan President stresses urgency of fairer credit system. Assistance from the Elysée Palace and UN Secretary Antonio Guterres
from our correspondent Alberto Magnani
NAIROBI - Africa "wants investment, not charity". In order to unlock them, it is necessary to review the "financial architecture" that penalises the inflow of capital and "discourages" financial interest in one of the continents with the highest demographic and economic growth. In his opening and closing speeches at Africa Forward, the first Franco-African summit in an English-speaking country, Kenyan President William Ruto insisted against the 'bias' of investors and rating agencies towards African economies and the record increases in the cost of African debt.
Ruto's appeal echoes governments' growing impatience with international credit ratings, culminating in the launch of a continental agency and the conflict between the multilateral bank Afreximbank and Fitch. French President Emmanuel Macron, co-organiser of the summit, took up the call and assured that he will propose an investment loss guarantee mechanism to the G7 in June, recalling the EUR 23 billion package 'mobilised' by the summit and announced on 11 May. "Ruto will be with us" at the G7, Macron emphasised in his closing speech, confirming French support for a reform of the financial system and the distortions unfavourable to African economies.
UN Secretary Antonio Guterres reiterated the need to "reform the financial architecture" and criticised the spread on loans that strains continental economies. "African countries pay twice the average cost of debt," Guterres said. "This is not a market verdict," he said, "It is a verdict on injustice.
The ballast on debt and the African 'surcharge'
The reform of the so-called financial architecture is a battle that is gaining ground among the continent's leaders and has been waged on several occasions by Ruto himself. The underlying claim is for a credit system that is fairer and less prejudiced towards African economies, which are being drowned by what analysts call the Africa Risk Premium: a premium on the cost of African debt, inflated by fears of insolvency and an overestimation of the risks implicit in investments in the continent's economies.
The spread evoked by Guterres translates into an extra bill of billions of dollars annually in interest compared to economies on other continents. An International Monetary Fund report of 2023 showed that African countries pay an average of 1.5% to 2% compared to the global average, a premium that translates into $15 billion more annually in debt servicing costs alone. The Africa Finance Corporation, a Lagos-based organisation, raises the bar to USD 75 billion.
