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For a Fairer Global Financial Architecture: My 10 key takeaways from the AfDB Annual Meetings 2024

Approximately 5,000 delegates participated in the recently concluded 50th Annual Meetings of the African Development Bank (AfDB), held from May 27 to 31, 2024, in Nairobi, Kenya.

The Annual Meetings brought together the Bank Group’s governors representing 54 African countries and 27 non-African shareholders, as well as heads of state, researchers, experts, representatives of international bodies, the private sector, and civil society actors. They engaged in discussions and shared insights and strategies centered around the event’s theme, “Driving Africa’s Transformation: The Reform of the Global Financial Architecture.” The event garnered coverage from 200 media outlets.

Our Team from the ONE Campaign hosted a side event on the upcoming replenishment of the African Development Fund, the concessional window of the AfDB, which plays a critical role in providing financing and technical assistance to low-income countries in Africa.

Here are my 10 key takeaways from the Bank’s Annual Meetings:

Africa is at a pivotal juncture in its development path, facing a series of interconnected crises that threaten the progress achieved in recent decades. Addressing these challenges necessitates a comprehensive financial approach rooted in global solidarity to effectively meet urgent needs.

With a burgeoning population, abundant natural resources, and a youthful demographic, the continent boasts significant potential for economic growth and prosperity. However, unlocking this potential demands substantial financial investments and strategic planning

1- Domestic Resource Mobilization (DRM) is crucial for Africa’s development. Enhancing efforts to mobilize domestic resources, including addressing Illicit Financial Flows. Every year, more than $89 billion leaves the African continent as Illicit Financial Flows, according to the UNCTAD. These are movements of money and assets across borders that are illegal in source, transfer, or use. It includes illicit capital that is getting out of the continent, tax and commercial practices like wrong invoicing of trade shipments, and criminal activities such as illegal markets, corruption, or theft.
In addition, African countries should prioritize modernizing their tax systems. Many African countries offer overly generous tax incentives that need reevaluation.

2- Reform: The international financial architecture needs urgent reforms to become more responsive, fairer, and resourceful. By the United Nations’ definition, the international financial architecture refers to the governance arrangements that safeguard the stability and function of the global monetary and financial systems. It has evolved over time, often in an ad hoc fashion, driven by the policy preferences of large economies (…).

The ecosystem of the International financial architecture that needs to be thoroughly reviewed includes but is not limited to: 

The Banks: IMF, WB, Regional Development Banks, etc.

The Markets: capital markets, stock markets, etc.

Credit Rating Agencies

International Tax Regime

3- Increasing concessional financing is essential to addressing African nations’ ambitious goals and priorities and tackling global challenges. Multilateral Development Banks (MDBs) must intensify their efforts. The upcoming replenishment of the International Development Association (IDA) and the African Development Fund presents opportunities to bolster financial support.

4- Private Sector: Effective private sector engagement is vital to mobilize the trillions required for the Sustainable Development Goals (SDGs) and Africa’s Agenda 2063, the Africa we want. MDBs alone cannot bridge the financing gap.

5 – Value Addition: Emphasizing value addition over raw material exports is key to economic prosperity in Africa because exporting raw materials often leads to impoverishment. Exporting raw materials is a highway to poverty. Value Addition is a gateway to prosperity.

6- Credit Rating: The global financial rating system must be fairer. A fairer rating could save Africa $75 billion a year in debt payments. Credit ratings impact the development trajectories of African countries by defining the cost of development financing. They also influence how much development partners can support critical investments on the continent.

AfDB is committed to supporting the creation of an African credit rating agency, not to replace or compete with existing agencies but to provide an alternative approach that takes into account contexts and realities on the continent.

7- Natural Capital: Africa’s natural capital is undervalued in the current calculation of GDPs. The AfDB committed to support the reevaluation of African countries’ GDP by incorporating natural capital considerations

8- AfDB Capital: The AfDB Board of Governors approved $117 billion of callable capital, bringing the total Bank’s capital from $201 Billion to $318 Billion.

Kenya is the first mover in replenishing the Africa Development Fund in 2025, with a pledge of $20 million.

9- Obstacles: Conflicts and political instability significantly hinder Africa’s progress and investment attractiveness. The lack of security increases the level of risk perceived by investors. Addressing these challenges is crucial as the continent’s youthful population continues to outpace job opportunities, leading to migration in search of better prospects. Corruption is surely the other obstacle that the continent needs to fight by all means.

10- New strategy: The African Development Bank Group introduced its Ten-Year Strategy 2024–2033, which focuses on investing in Africa’s youth and promoting gender equality, climate resilience, stability in fragile states, and good governance.

To achieve these objectives, the bank will deploy the following operational priorities.

  • Light up and power Africa: Promote universal access to modern and affordable energy.
  • Feed Africa: Ensure food security through agricultural transformation.
  • Industrialize Africa: Catalyze manufacturing as a critical driver of job creation.
  • Integrate Africa: Foster regional integration and value chains for a more cohesive economy.
  • Improve the quality of life: Enhance living standards, particularly for women and youth.

Report: During the Annual Meetings, the AfDB published its flagship report, The Africa Economic Outlook.

Your comments and suggestions are also welcome on this site or directly to my email address: Desire.Assogbavi@assodesire.com  or Assogbavi@me.com .

Watch this space for more updates on Pan-African & African Union matters.

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2 Comments Posted on AfCFTA, Africa, African Politics, african union, AU Summit, AUSummit, Conflicts, G20

Outcomes of the African Union Summit in 7 Points

Published on 19 February 2024. This blog will be updated as more information comes in.

Official decisions of the just-ended African Union Summit will not be available for several weeks as per the practice, but based on intel, comments by delegations, and corridors discussions, here are what seem to be the 7 key outcomes of the Summit held in Addis Ababa, Ethiopia, from the 14th – 18th February 2024.

The theme of the Summit and the year 2024 is: “Educate an African Fit for the 21st Century: Building Resilient Education Systems for Increased Access to Inclusive, lifelong, quality, and Relevant Learning in Africa.”

The Summit adopted a Road Map on the theme devoted to Education and called upon the African Union Commission, AUDA-NEPAD, Regional Economic Communities, United Nations organizations, Development Partners, Civil Society Organizations, the Youth, and all other stakeholders to continue strengthening their support to Member States by facilitating the implementation of the roadmap.

The following issues have actually dominated the discussions at the Summit:

1/ Multilateralism & International Governance

Africa at the UN Security Council

The African Union reiterated that full representation of Africa in the reformed United Nations Security Council means:

  • i) Not less than two (02) Permanent seats with all the prerogatives and privileges of Permanent membership, including the right of veto.
  • ii) Five (05) Non-permanent seats.
  • iii) The African Union reserves the right to select its representatives for election to the UN Security Council to act in its name and on its behalf.

Proposed Modalities for the Participation of the African Union in the G20 and Preliminary Priorities

At the G20, AU aims to leverage Africa’s position in the world economy as well as contribute to meeting the emerging global challenges

Participation in the Leaders’ Summit:

  • The Chairperson of the African Union, assisted by the Chairperson of the African Union Commission, will represent the African Union (previously decided)
  • The Chairperson of the Commission to propose positions to the Assembly to be advanced as African Common positions in the G20 Leaders’ Summits.
  • The Chairperson of the African Union, assisted by the Chairperson of the Commission to debrief the Assembly on the outcomes of the G20 Leaders’ Summits at the February sessions of the Assembly each year.

Participation in Ministerial meetings

  • The Chairperson of the African Union Executive Council, assisted by the Chairperson of the Commission to represent the African Union in the G20 Meetings of the Ministers of Foreign Affairs.
  • The Chairpersons of the AU Specialized Technical Committees, assisted by the respective Commissioners, to lead African Delegations to G20 sectoral Ministerial Meetings
  • The Chairperson of the Specialized Technical Committees (STC) on Finance, Monetary Affairs, Economic Planning, and Integration, assisted by the Commissioner for Economic Development, Trade, Tourism, Industry, and Minerals to attend the meetings of the G20 Finance Ministers and Central Bank Governors, assisted by the respective Commissioner(s);
  • The Ministerial Representatives to the G20 to propose draft African common positions through the Specialized Technical Committees for consideration by the Executive Council before it is advanced in the G20 Ministerial meetings and Leaders’ Summits

Sherpa and Sous Sherpa

  • The Chairperson of the African Union to appoint a Sherpa. As the AU G20 contact point, the Sherpa shall coordinate with the Chairperson of the African Union Commission and the AU Member States on the positions to be advanced in the various G20 Ministerial, Task Forces and Working Group meetings to ensure that the African Union prepares common positions ahead of each G20 meeting and speaks with one voice in the G20 meetings;
  • The Chairperson of the Commission to appoint a Sous-Sherpa to: (a)Act as liaison between the Commission and the Chairperson of the Union; (b)Work with and Deputize the Sherpa; (c)Report to the Chairperson of the Union on G20 matters.

South Africa, the only current African permanent member of the G20, will share lessons of experience in the G20 with the African Union.

Africa’s preliminary priorities at the G20 will be as follows: the reform of the international financial architecture, debt restructuring, food security and agriculture, energy transition, trade and investments, improving Africa’s credit rating to boost investment, health, and vaccine manufacturing.

Financing AU participation in the G20

African Development Bank (AfDB) and the African Export-Import Bank (Afreximbank) pledged to provide initial financing for the participation of the African Union in the G20.

Delegation of Power: The Executive Council (Foreign Ministers) will deal with G20 issues on behalf of the Assembly during its July Ordinary Sessions of the Council and, when necessary, convene extraordinary sessions.

2/ Election of the new leadership of the AU Commission (February 2025)

The Summit discussed the principles of inter-and intra-regional rotation following the English Alphabetical order under the decision Ext/Assembly/AU/Dec.1(XI) adopted during the 11th Extraordinary Session in November 2018 on the institutional reform of the Union as well as Article 14 of the revised Statute of the Commission.

If this is implemented, candidacies should be submitted based on a predictable inter-regional rotation with the allocation of specific portfolio(s) to regions as follows for the next election:

For example, considering the upcoming elections, if this principle is applied, we would have the following conditions for each position:

1. Chairperson of the AUC – Only the Eastern region may submit candidates.

2. Deputy Chairperson – Only the Northern region may submit candidates.

3. Agriculture, Rural Development, Blue Economy, and Sustainable Environment – Only the Southern region may submit candidates.

4. Economic Development, Trade, Industry, and Mining – Only the southern region may submit candidates.

5. Education, Science, Technology, and Innovation – Only the Western region may submit candidates.

6. Infrastructure and Energy – Only the Western region may submit candidates.

7. Political Affairs, Peace & Security – Only the Central region may submit candidates.

8. Health, Humanitarian Affairs, and Social Development – Only the Central region may submit candidates.

At this time, it is unclear whether the AU will go with this principle for the upcoming elections.

3/ Institutional Reform of the African Union: President Kagame steps down, and President Ruto takes over.

Frustrated by what most analysts call the “failure of the AU institutional reform” 6 years after the beginning of the process, President Paul Kagame decided to step down from championing the project. The Summit then appointed President William Ruto of Kenya as the new AU Champion on Institutional Reform. The remaining reform priorities are to be finalized by February 2025.

4/Peace and Security

The following situations have been discussed with no major decisions:

The tension between Ethiopia and Somalia, Sudan, South Sudan, Burkina Faso, Niger Mali, Gabon, Sierra Leonne, DRC-Rwanda, Central Africa Republic, Lac Chad Basin, and some thematic issues.

5/ The Theme of the year 2025 has been proposed to be: ‘‘Justice for Africans and People of African Descent Through Reparations’’.

The reparations for transatlantic enslavement, colonialism and apartheid, as a Flagship Issue and Project of the Union. The Commission is to submit a strategic framework document for the implementation of the Accra Proclamation on the same.

6/ Appointments

Chair of the African Union for 2024
  • Chairperson of the African Union for 2024: Mauritanian President Mohamed Ould Cheikh El Ghazouani. Angola is likely to take over in 2025.
  • Champion of the institutional reform of the AU: President William Ruto of Kenya
  • Champion for local manufacturing of pharmaceutical and non-pharmaceutical products, President Ruto from Kenya
  • Leader in Advancing the Cause of Justice and Payment of Reparations to Africans, enhancing advocacy for a common position on reparations in Africa, and forging a common front for Africa and the Diaspora at the global level: President Nana Akufo-Addo of Ghana
  • Mr. Wamkele Mene of South Africa was reappointed as Secretary General of the AfCFTA Secretariat for another four years.

10 new members of the Peace and Security Council for a term of 2 years:

1. Democratic Republic of Congo, Central Africa region

2. Equatorial Guinea, Central Africa region

3. Tanzania, Eastern Africa region

4. Uganda, Eastern Africa region

5. Egypt, Northern Africa region

6. Angola, Southern Africa region

7. Botswana, Southern Africa region

8. Côte d’Ivoire, Western Africa region

9. Sierra Leone, Western Africa, region

10. The Gambia, Western Africa region

7/ Calendar

2025 Summit of the AU

  • Executive Council, 12th and 13th February 2025;
  • 38th Ordinary Session of the Assembly, 15th and 16th February 2025

Special Summit to consider the post-Malabo CAADP implementation plan: November 2024

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Watch this space for more updates on Pan-African & African Union matters. Your comments and suggestions are welcome on this site or directly to my email address: desire.assogbavi@assodesire.com  or assogbavi@me.com .

If you want to systematically receive my articles as soon as they are published, please follow this blog at the bottom left of this page.