In a significant address to African leaders, President Akufo-Addo of Ghana has made a bold proposal that aims to reshape Africa’s financial landscape. During the 37th Ordinary Session of the Assembly of Heads of State of the African Union (AU) held on February 17, 2024, he urged fellow African Heads of State and governments to consider investing up to thirty percent (30%) of their foreign sovereign reserves in African financial institutions. This strategic move is intended to bolster the balance sheets of these institutions, enhancing their capability to support Africa’s development at an accelerated pace.
Historically, African nations have placed one hundred percent (100%) of their foreign sovereign reserves in financial institutions outside the continent, a practice that President Akufo-Addo critiques for yielding little to no profit and failing to benefit Africa’s growth. By redirecting a portion of these reserves back into Africa, the President envisions a strengthened financial sector that is better equipped to fuel the continent’s ambitious development goals.
The call to action was made during a dialogue focusing on the theme: ‘Establishing African Union Financial Institutions in the Context of Africa’s Agenda for Global Financial Architecture Reform.’ President Akufo-Addo emphasized the necessity of reinforcing African financial and multilateral institutions, advocating for a self-reliant approach to development with the adage “God helps those who help themselves.”
Highlighting the systemic challenges faced by Africa within the global financial architecture, President Akufo-Addo pointed out the urgent need for reform. He underscored the importance of empowering African multilateral institutions like the African Development Bank (AfDB) and the African Export-Import Bank (Afreximbank) through substantial investment, which would, in turn, enable these entities to play a more significant role in financing Africa’s economic advancement.
In addition to financial reforms, President Akufo-Addo proposed the institutionalization of an annual African economic summit. This initiative aims to create a platform for strategic dialogue on economic matters, reducing the need for African leaders to seek solutions abroad. This homegrown approach to addressing financial challenges underscores the President’s vision for a more autonomous and economically resilient Africa.
President William Ruto of Kenya echoed President Akufo-Addo’s sentiments, expressing full support for these transformative proposals. Ruto highlighted the potential of these initiatives to catapult Africa into a new era of development and called for a shift towards organizing development financing and economic summits within Africa itself. The dialogue also saw the introduction of the APD 2024 Compact Document, an outcome document from the Africa Prosperity Dialogues held in Ghana. President Akufo-Addo advocated for the adoption of this document by the AU and all heads of state, emphasizing its recommendations for achieving interoperability on the African continent.
A landmark moment at the event was the launch of the Alliance of African Multilateral Financial Institutions (AAMFI), also known as ‘The Africa Club.’ This alliance, comprising heads of leading African multilateral financial institutions, is set to play a pivotal role in advocating for Africa’s interests in global finance and addressing the continent’s development finance needs through innovative solutions. President Akufo-Addo’s proposals represent a strategic pivot towards harnessing Africa’s financial resources for its benefit.
