African leaders are calling for urgent reforms to the global financial system, which they argue unfairly penalizes African nations with exorbitant borrowing rates. This demand was a focal point at a major economic conference in Kenya this week.
The need for change has been increasingly voiced as African countries grapple with severe debt levels and volatile exchange rates. The African Development Bank (AfDB) predicts that the continent’s economy will grow by 3.7 percent this year—a respectable rate given global conditions but insufficient relative to the continent’s population growth.
To truly “transform Africa,” a theme highlighted at the AfDB annual meetings in Nairobi, substantial financial resources are needed, stated Kenyan President William Ruto during the event’s opening ceremony.
“We face the rigid barrier of a global financial architecture that is fundamentally misaligned with our aspirations,” Ruto emphasized.
He pointed out that African countries are forced to borrow on capital markets at interest rates significantly higher than those available to other nations, sometimes eight to ten times more. This disparity, Ruto argued, stems from an unjust system.
For instance, after a period of limited access to international markets, Kenya managed to raise $1.5 billion through a Eurobond in February at an interest rate of around 10 percent. In stark contrast, the yield on 10-year French government bonds is approximately three percent.
AfDB President Akinwumi Adesina also criticized the “so-called Africa risk premium,” which compels African countries to secure funds at higher rates than other nations with similar credit ratings. He highlighted that, according to the UN Development Programme, if Africa’s risks were assessed fairly, the continent could save $75 billion annually in debt service costs.
Adesina noted that Africa’s real GDP growth is projected at 3.7 percent this year and 4.3 percent in 2025, up from 3.1 percent last year, despite facing numerous challenges.
However, Ruto warned that “the pace of African development remains far behind its undeniable potential,” urging for systemic changes to align global financial structures with the continent’s development goals.
