February 2, 2023

African finance ministers lament Africa occupies smallest seats at global decision-making tables

Managing Director Kristalina Georgieva, First Vice President of Spain and IMFC Chair Nadia Calvino, Secretary General of the United Nations António Guterres, and Secretary of the Fund and Secretary’s Department Director Ceda Ogada participate in the IMFC Plenary Session during the 2022 Annual Meetings at the International Monetary Fund.

IMF Photo/Cory Hancock
14 October 2022
Washington, DC, United States
Photo ref: CH221014015.arw
Managing Director Kristalina Georgieva, First Vice President of Spain and IMFC Chair Nadia Calvino, Secretary General of the United Nations António Guterres, and Secretary of the Fund and Secretary’s Department Director Ceda Ogada participate in the IMFC Plenary Session during the 2022 Annual Meetings at the International Monetary Fund. IMF Photo/Cory Hancock 14 October 2022 Washington, DC, United States Photo ref: CH221014015.arw

Three African finance ministers on Saturday lamented that Africa, a large continent of about 1.3 billion people, and with abundant natural resources, is often given smallest seats at global decision-making tables, including at the just concluded Annual Meetings of the International Monetary Fund and the World Bank Group.

Finance ministers from Zambia, Dr. Situmbeko Musokotwane, Zimbabwe, Prof. Mthuli Ncube, and South Sudan, Dier Tong Ngor, acknowledged that although Africa is increasingly seen at decision-making tables, the continent often occupies the smallest seats there, especially because it is the recipient of aid and other forms of support from the rest of the world.

The ministers made the comments at a press conference at the conclusion of the 2022 IMF and World Bank Annual Meetings in Washington D.C., United States.

Sharing their perspectives on the implications of the current global context for the sub-Saharan Africa region, including on issues such as rising inflation, climate change, food security and debt vulnerabilities, the ministers said African voices should matter when decisions about Africa are taken.

“Most of the time, we are recipients of support, of aid, of resources, as opposed to the giver of resources to the rest of the world, and that creates a naturally uneven relationship,” said Prof. Mthuli Ncube, the minister of finance from Zimbabwe.

He said that Africans are increasingly at the table but they occupy a small stool at the table,” adding that finance assistance or economic packages would be more impactful if the givers listened more to those who understand Africa better.

The minister of finance from Zambia, Dr. Situmbeko Musokotwane, echoed the same sentiment, saying that African voices were not being heard as the continent often occupies a very narrow space at the decision-making table and that the continent is often marginalized.

South Sudan finance minister, Dier Tong Ngor, said that Africa should always be at the table and that a collective push by Africa is being made to include African voices, concerns and recommendations whenever Africa is being discussed.

More broadly, the three ministers agreed that the continent is going through a myriad of economic challenges, a result of a spillover of the current gloomy global economic outlook.

They said that adjustments would be needed to tackle the growing food insecurity exacerbated by Russia’s war on Ukraine, the increasing inflation levels, the fluctuating exchange rates to the dollar, and the limited available resources for investment. They also addressed the issue of debt restructuring, or cancelation and pressures African countries feel in repaying loans because of high interest rates by the lenders.

On Friday, the International Monetary Fund (IMF) released its latest regional economic outlook for Sub-Saharan Africa, projecting that the region would likely grow by 3.6 percent in 2022, down from 4.7 percent in 2021, as a result of what it described as “muted investment and the overall worsening of its balance of trade.”

IMF projected that Africa’s economy would likely remain modest in 2023, growing only by 3.7 percent, a meager and almost insignificant 0.1 percent increase from this year, far below what it was last year, when many hoped that the economy was back on track following a deadly pandemic that triggered devastating shutdowns and massive economic disruptions.

However, the story is not the same across a big continent with more than 50 countries, clarified Abebe Aemro Selassie, the Director of the African Department at the IMF, as non-resource-intensive countries, for instance, which enjoy a more diverse economic structure, will continue to be among the region’s more dynamic and resilient economies, growing by 4.6 percent in 2022, compared to 3.3 percent in oil exporters and 3.1 percent in other resource-intensive countries.

Oil exporters in Africa include nations such as Nigeria, Angola, Equatorial Guinea and others, but even among those, the story is not exactly the same. Nigeria for instance is expected to grow by 3.2 percent this year, down from 3.6 percent last year. In 2023, the Nigerian economy, one of the biggest in Africa will slow further, growing by 3.0 percent.

Angola, Africa’s top oil producer would see a significant gain this year and next, growing by 2.9 percent in 2022 from 0.8 percent in 2021. And next year, things would be even better, with a projected growth of 3.7 percent.

“Late last year, sub-Saharan Africa appeared to be on a strong recovery path out of a long pandemic. Unfortunately, this progress has been abruptly interrupted by turmoil in global markets, placing further pressures on policymakers in the region,” Selassie said at a press briefing in Washington where the 2022 IMF and World Bank Annual Meetings were taking place.

He said that a downturn in advanced economies and emerging markets, tighter financial conditions, and volatile commodity prices, have undermined last year’s gains.

“Following worldwide trends, inflation has increased faster and more persistently than previously anticipated, reflecting mounting prices for essential food and energy items, which comprise about 50 percent of the region’s consumption basket. And while the recent pickup in inflation is less striking relative to historical averages for sub-Saharan Africa, the cost-of-living squeeze has pushed millions of people into acute food insecurity and could weigh on economic growth and undermine social and political stability,” he said. “The most recent turmoil is just the latest in a series of shocks over the past few years, all of which have taken a toll on the region’s policy space. Public debt has reached about 60 percent of GDP, leaving the region with debt levels last seen in the early 2000s. In this regard, the composition of debt has shifted towards higher-cost private sources, increasing debt service costs and rollover risks. In fact, 19 of the region’s 35 low-income countries are now in debt distress or at high risk of distress.”

Against that backdrop, Mr. Selassie pointed to four priorities for policy makers in the region:

First, in the context of rising food insecurity, the utmost priority must be to protect the most vulnerable. Scarce resources should go to those who need them most. Poorly targeted emergency measures should be gradually phased out. Second, to contend with increased inflation and tightening global interest rates, policymakers should cautiously raise policy rates, while keeping a close eye on inflation expectations and foreign exchange reserves,” he said.

“Third, policy makers in the region need to continue consolidating their public finances to preserve fiscal sustainability, particularly in the context of rising interest rates. Credible medium-term fiscal frameworks, including effective debt management, can help lower borrowing costs. In countries with acute debt vulnerabilities, debt restructuring or reprofiling may be required, suggesting the need for improved implementation of the G20 Common Framework.

“And finally, they should set the stage for high-quality growth, amid accelerating climate change. Investment in resilient, green infrastructure, and capitalizing on the region’s sizable renewable-energy resources will require both innovative private finance and energy sector reforms.

“Budget support—including official development financing and humanitarian assistance—has been declining over the past two decades while the region’s immediate and longer-term development needs are rising, particularly in areas such as food security and climate change. Increased support, including more concessional finance, will be crucial for sub-Saharan Africa to be able to pursue a low-carbon and climate-resilient growth path.

“On our side, we have been supporting sub-Saharan Africa with close to $50 billion since the beginning of the pandemic; recent new Fund-supported programs (e.g., Benin, Cabo Verde, Mozambique, Tanzania, Zambia), have included policies to address the impact of the food crisis; and the IMF Board has just approved a new Food Shock Window to support our members suffering from acute food insecurity, a sharp food imports shock, or from a cereals export shock.

“We are also helping catalyze new capital inflows by boosting local capacity and expanding our lending facilities with our new Resilience and Sustainability Trust to provide affordable financing to address longer-term structural challenges.

“With help, sub-Saharan Africa will be poised to fulfill the promise of the African century, contributing to a more prosperous, greener future for the region and the world,” he said.

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