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We need to strengthen African financing institutions, says AFD’s Remy Rioux

23 March, 2021
We need to strengthen African financing institutions, says AFD’s Remy Rioux

At the just-ended COM2021, Remy Rioux, CEO of the French Development Agency (AFD), spoke during a high-level panel discussion on managing debt and liquidity, and the role of the private sector.  Here’s his full response to the question of how international partners and financial institutions can best support the financing of Africa's recovery, especially with regard to a new issuance and distribution of IMF Special Drawing Rights and the possible extension of the G20's Debt Suspension Initiative (DSSI).

Remy Rioux: As you know we are preparing a Summit that will be held on the 18th of May on the financing of African economies.  Vera Songwe is heavily involved in that and she will be putting forward proposals on behalf of ECA.  This follows on from a statement made by President Macron back in 2020.

We hope that progress will be made on the 18th of May and decisions will be taken when it comes to setting-up the common framework on debt, and perhaps also on the DSSI and on the restructuring of debt. You also talked about the issuance of SDRs and the start of a reallocation mechanism.

A number of proposals have just been put forward, so there are lots of things on the table, and this should lead to the reform of financial governance to make sure that debt in Africa becomes sustainable over the long term, and we must make sure, of course, that we are talking about $350 billion needed by the end of 2023.  So, we need to free-up eye significant share of those as quickly as possible.

Now, I would just like to touch upon the issue of the liquidities, how we free them up and how we make sure they finance the right investments. They will finance imports, they will help with public expenditure in some countries, but I want to focus on public investment and the strengthening of financial mechanisms in respect of the private sector. In November of last year, and we got help from ECA for this, they made a specific contribution to the role of public development banks in Africa, and I think that we need to take this opportunity now. We need to be very ambitious, and we need to strengthen African financing institutions so that we can finance the fight against climate change and eradicating inequalities.

We defined the climate agenda in 2015.  We need to focus on sustainable developments, obviously Governments and public banks and regional banks, for example, the African regional development bank.

There are 94 such banks that provide $28 billion of investment each year.  So, these instruments need to be mobilized for the private sector, and they need to plug the financing deficits that exist at the moment so that we can provide help to micro companies and help SMEs, give them swifter help.  So that is the work of the DFIs.  There are such bodies in Africa.  We need to strengthen them.

Talking about social accommodation, this is where we need to focus on developing employment and developing growth in Africa. We have been working together with Ministers and I will know hand over to them so that they can talk about how we are going to draw on and create new resources over the next few weeks to meet the objectives I have just mentioned.  Thank you very much.