The African Development Bank is expressing concerns that the debt resolution mechanism for Ghana and other debt-distressed African countries has been slow and challenging.
The Development Bank argues that although the G20 framework on debt resolution has been helpful in mitigating the crisis by harmonizing official creditors and other commercial lenders, the debt treatment architecture, in the bank's estimation, has been a difficult process.
Addressing reporters at the 59th AfDB Annual Meetings in Nairobi, Kenya, the President of the African Development Bank Group, Dr. Akinwumi Adesina, called for a reform in the global financial architecture to provide a better debt resolution mechanism for Africa.
“I understand it takes a long, it's a very difficult process because you have Paris club members, you have non Paris club members, and you have commercial lenders and their needs are quite different from those of official creditors. But it's helped, it's helped with Chad, it's helped with Zambia, it's helped with Ghana, and it's working also on Ethiopia in putting together the various credit committees that said that process, everybody agrees, is too slow,” Dr. Akinwumi Adesina said.
The President of the African Development Bank further advanced his argument by citing a historical account from the 1990s, where many African countries, taking advantage of multilateral debt relief initiatives such as the Highly Indebted Poor Countries (HIPC) initiative, lost a decade of economic advancement because they were unable to properly negotiate their debt treatment options.
Using his personal analogy of hemorrhage, Dr. Adesina intimated that "You know, if you're going to, if you have to help somebody that is bleeding and you want to save their life, stop the bleeding faster, because by the time that you actually do it, they may be dead."
"So what you find African countries asking for is a speedier implementation and execution of those global mechanisms to deal with the issue of debt."
The 59th annual meeting of the African Development Bank is focusing on “Africa's Transformation, the African Development Bank Group, and the Reform of the Global Financial Architecture” which AfDB belives will create a platform to dialogue on the issues confronting the many African economies while examining the structural reforms required in the International Financial Architecture.
Over the next few days, Heads of Governments Central banks and other multilateral institutions will converge here to dialogue on matters confronting the African economy. Being the statutory meeting of the African Development Bank, stakeholders are also expected to examine the performance of the Bank in the previous year as it positions itself for a new outlook while making some relevant decisions backed by resolutions.
Climate is also key on the agenda with the AFDB pointing out that climate adaptation and a boost in agriculture financing will go a long way to promote sustainable growth.
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