President Akufo-Addo has called on African Heads of State and governments to consider taking a collective decision to invest up to thirty percent (30%) of their foreign sovereign reserves in African financial institutions to boost their balance sheets and their ability to support Africa’s rapid development.
Currently, all African countries, according to President Akufo-Addo, are holding and investing one hundred percent (100%) of their foreign sovereign reserves in financial institutions outside Africa, even though those investments yield little to no profits. This phenomenon, President Akufo-Addo said has not and will not yield any benefits to the continent.
The President made the call when he delivered the keynote address at the Heads of State and Government’s Dialogue on Saturday, 17 February 2024, at the 37th Ordinary Session of the Assembly of Heads of State of the African Union (AU), on the theme: ‘Establishing African Union Financial Institutions in the Context of Africa’s Agenda for Global Financial Architecture Reform.’
Africa’s Financial Institutions
President Akufo-Addo said it is time to strengthen the continent’s financial and multilateral establishments to increase their capacity to support the continent’s developmental agenda with the catchphrase “God helps those who help themselves.” The President to this end pointed to the fact that it is time for the African people to look inward and to support themselves to develop.
“We are all in agreement that the way the global financial architecture works is not in our [Africa’s] favour, and there is the need to make some fundamental and systemic reforms. But making the reforms also requires that we [Africans] also take some steps that will assist us to have a greater impact in the way in which our economies are financed.
“As it stands, virtually all our countries hold our reserves in foreign banks, attracting largely negative rates of interest. The proposal that I am going to put to the plenary is that we should decide that a minimum of 30% of the reserves of each one of us, sovereign reserves, should be invested in the African multilateral institutions,” President Akufo-Addo advocated.
“I speak about the AfDB, I speak of Afreximbank. We should strengthen their balance sheets and strengthen their capacity to facilitate more and more resources for our development. If we find a way that we can increase the financial power of our institutions, we are in a better place to finance our development,”Akufo-Addo added.
Strategic Economic Matters
In his address, President Akufo-Addo also called for the institutionalization of an annual African economic summit that will mainly focus on finding strategic solutions to the many financial challenges affecting the African continent instead of all African leaders traveling at the same time to several countries such as the United States of America, India, China, Japan, among others, in the name of attending summits with these countries in search of economic solutions.
“We spend a lot of our time going from one country to another, having these summits. We have summits with China, India, Japan, and America. We now have summits with Turkey, and recently with Italy and other countries are also going to have these summits. We [African Heads of State] all go to these summits because we do not want to endanger our relations with them.
“If we can find an institutional arrangement for ourselves whereby at least once a year, we can meet to talk about the strategic economic matters that affect our continent, I think we will obviate the need for these moving around from one country to the other and that is the idea of having every year, an economic summit,” President Akufo-Addo suggested.
President William Ruto
President of the Republic of Kenya, William Ruto, in his remarks at the dialogues, registered his full support for the two proposals put forth by President Akufo-Addo in his address. He indicated that the two proposals suggested by the Ghanaian leader are essential if the African continent wants to leapfrog to its next level of development.
“I am very happy that President Nana [Akufo-Addo] has made two fundamental proposals that I fully support. He has proposed that we must empower our own African financial and multilateral institutions. He has proposed that 30% of all our reserves that are in all manner of places earning sometimes, negative interest, we should make it available to our African multilateral institutions. I agree one hundred percent. It is a step in the right direction.
“I also agree that instead of globetrotting and going to every other place, we need to organize our own development financing and economic summit where we invite those who want to do business with us to come and engage with us,” President William Ruto said in his statement.
“I think it is only fair that we have made good our part of the bargain. We have gone to many capitals. Surely, it is time for them to come to ours, and I think we will not be asking for too much. I will take up the challenge if it is agreed that that be the case, I will offer to host the first summit,” the Kenyan leader further remarked.
APD 2024 Compact Document
All participants at the Heads of States and Government’s Dialogue received a copy of the compact document (Peduase Compact) of the 2024 Africa Prosperity Dialogues (APD 2024) held in Ghana at the Peduase Presidential Lodge, Aburi Hills, from Thursday, 25th to Saturday, 27th January 2024, under the theme; Delivering Prosperity in Africa: Produce, Add Value, Trade.
President Akufo-Addo during the plenary with his colleague Heads of State in the Nelson Mandela Plenary Hall at the African Union headquarters, will invite the African Union and all heads of state present to adopt the APD 2024 outcome document and to see to the implementation of the recommendations in it, especially on the subject of achieving interoperability on the African continent.
The AAMFI
At the same event, President Akufo-Addo, President William Ruto, and the Zambian President, Hakainde Hichilema, joined some seven heads of leading African multilateral financial institutions, (Afreximbank, Africa Finance Corporation (AFC), African Reinsurance Corporation (Africa-Re), Africa Trade and Investment Development Insurance (ATIDI), Shelter Afrique, Trade and Development Bank (TDB Group) and PTA Reinsurance Company (ZEP-RE)), to launch the Alliance of African Multilateral Financial Institutions (AAMFI) which is also to be known as ‘The Africa Club’.
Objectives of “The Africa Club”
The Alliance of African Multilateral Financial Institutions (AAMFI), is essentially an alliance of treaty-based African-owned, and controlled African Multilateral Financial Institutions (AMFI), established to advance the interests of their African member states in global finance and to advocate for AMFIs’ role in protecting and promoting them.
AAMFI’s mandate is to promote collaboration, cooperation, and coordination among its members in finding solutions aimed at promoting, as well as supporting Africa’s sustainable economic development and integration objectives, in line with member institutions’ respective mandates and furtherance of their development objectives.
The AAMFI has six main objectives. The first is to collaborate and exchange information on progressive joint strategies and frameworks to address Africa’s development finance needs. The second is to protect and promote the interest of AMFI African member states and shareholders, and the third, advocate for Africa’s interests on global finance issues.
The fourth objective is to develop innovative tools and instruments addressing Africa’s financial needs. Fifth, is to support, develop, and implement strategies and interventions to scale up and improve the effectiveness of the sustainable financing of the continent’s development objectives and African Union’s Agenda 2063 aspirations; and lastly, coordinate debt management negotiations between AAMFI members and debtor countries.
