Deputy Executive Secretary and Chief Economist of the United Nations Economic Commission for Africa
Opening Remarks
Expert Meeting of the 7th STC on Finance, Monetary Affairs, Economic Planning and Integration
03 July 2024, 09:00 Tunis Time
Your Excellency Minister Sihem,
Your Excellency Commissioner Muchanga
Excellencies,
Distinguished delegates,
Good morning!
It is my great honour to be here and deliver opening remarks at the expert segment of the 7th Ordinary Session of the Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration. First of all, I extend my sincere appreciation to the African Union Commission for the kind invitation, and the people and government of Tunisia for the hospitality.
Excellencies,
Since the 6th Session of this STC in Nairobi in July last year, we witnessed economic, social, and environmental conditions getting worse instead of improving in many African countries:
To start with, Africa’s public debt issues remain precarious. Africa’s average Debt to GDP ratio surged from 62.8% in 2022 to 65.8% in 2023. In addition, the growing appreciation of the dollar and soaring global interest rates, increased debt servicing obligations. In order to create fiscal space for delivering essential public services, including health, education, infrastructure, stimulate growth, and finance climate action, it is essential for African countries to receive expeditious, orderly, and fair treatment for debt resolution.
Secondly, escalating trade fragmentation and rising protectionism is causing havoc in the global global supply chains, posing a significant threat to our food and energy security, and inevitably leading to a surge in cost of living. Shockingly, the year 2023 witnessed a staggering 1624 instances of restrictive trade measures implemented worldwide, marking a stark increase from the 1364 interventions in 2022, and a mere 367 back in 2018[1]. To fortify economic stability of our nations, It is imperative to strengthen regional collaboration, fostering growth of resilient regional value chains.
Finally, the relentless climate-related disasters continue to devastate the lives and livelihoods of the most vulnerable populations. In 2023, 64 natural disasters took more than 20,000 lives in Africa, and about 12.7 million people were affected[2]. Droughts, floods, and out-of-season cyclones have become more often and more serious. To save our people from being pushed into climate-caused humanitarian crisis and conflicts, we must speed up our climate actions.
Excellencies,
Given these challenges, we must scale up our joint efforts for policy coordination. That’s why this theme of this STC “Enhancing Macroeconomic and sectoral policies coordination in Africa: challenges, opportunities and policy priorities for inclusive growth and sustainable development”, is very timely. ECA works hand in hand with the African Union Commission, the Regional Economic Communities, development partners to support our countries.
On debt and the reform of the Global Financial Architecture, ECA has been working closely with AUC, AfDB, Afreximbank, and our African Ministers of Finance, Planning, and Economic Development, to convene the meetings of the High-Level Working Group and develop and advocate our African common positions. In the past year, we held meetings on the side-lines of the IMF-World Bank annual meetings in Marrakesh, ECA Conference of Ministers in Victoria Falls, IMF-World Bank spring meetings in Washington DC, and AfDB annual meetings in Nairobi. We are glad to see positive updates such as AU’s entry into G20, the 3rd seat for Africa in IMF executive board, and approval of SDR rechannelling through MDBs as hybrid capital instrument. But we have to further amplify African voice and representation in international financial institutions. We must advance the debt restructuring negotiations, reform the debt resolution frameworks, undertake pre-emptive restructuring and other measures, and use innovative solutions. The goal is to resolve the ongoing debt issues that have been burdening our countries and causing development distress while preventing their reoccurrence in the future.
On regional integration and regional value chains, ECA has been actively advocating and advancing the AfCFTA – which is the theme of our Conference of Ministers next year – and supporting its implementation. The development of regional value chains, based on comparative advantages of our countries, cannot be overemphasized. Its success depends not only on harmonization of trade policies and removal of trade barriers, but also on liberalisation of intra-African investment, efficient cross-border transport and payment systems, and creation of an enabling environment for the private sector. The role of political will, trust and good governance is also key for the success of the pan-African project. Africa can no longer depend on commodities and raw materials and be at the bottom of global value chains. Instead, we shall seize the opportunity of green industries for value addition and inclusive and just development.
On climate action, from finance perspective, ECA works with partners to support countries in leveraging the innovative financing instruments. In early 2023, we supported the debt for climate swap for Cabo Verde, which channelled its 12-million-euro debt repayments into climate change and energy transition fund. However, we must join our efforts to move from millions to billions. This is why we need to tap into economies of scale and bring our interventions to the regional level, not only for debt swaps, but also for green and blue bonds and carbon markets. At the same time, we shall build the capacity of our countries in legal and data systems, to reduce the transaction cost and the cost of monitoring and reporting.
Excellencies,
As we confront the array of challenges before us, it is imperative that we not only recognize them but also seize the opportunities they present. With unwavering confidence, I believe that by bolstering macroeconomic and sector-specific policy alignment and harnessing coordinated assistance from regional bodies and allies in development, we can realize a future marked by comprehensive growth and enduring sustainability across our continent.
Thank you.