Following the COVID-19 crisis, the Ukraine war, and the growing fight against inflation in rich countries, the global economy is heading for years of weak growth, rising prices, and high interest rates. These developments have destabilizing consequences for low and lower-middle-income economies, and especially so in the Sub-Saharan Africa (SSA) region. Many of these countries already face or will soon face debt distress and/or fiscal crises. Furthermore, climate change is already causing loss of lives and livelihoods across the continent, and its effects are expected to get much worse in the coming years.
And yet, SSA is barely vaccinated, the Debt Service Suspension Initiative DSSI initiative has already elapsed, the promised Special Drawing Rights (SDR)-reallocation has not happened, the G20-created Common Framework to organize debt restructuring has not taken off, climate funding has not reached the promised $100 billion mark, and the multilateral and regional banks continue with business-as-usual approaches.
Development has slipped low on the international agenda, and the global and regional institutions in charge of supporting development are currently not able to avert the multiple crises affecting SSA. Leaders on the continent need to champion a “global wake-up call for action” to start addressing forcefully the interlocking economic, social, and environmental challenges. An urgent focus must be on reforming the global financial architecture, which is no longer fit-for-purpose and is failing Africa. What is needed is a new global partnership for economic transformation.
There is an emerging plethora of actors and initiatives that aim at addressing the failures of the global financial architecture, including the Independent Review of MDBs’ Capital Adequacy Frameworks, the Bridgetown Agenda, and others. In Africa, UNECA had started convening meetings of African Ministers of Finance. But so far, Africa’s voice is missing in the global debates. There are few advocates for innovative solutions and new initiatives among intellectuals, policy institutes, think tanks, thought leaders, or academia. While the rising issues are global, they have an outsized impact on African economies and societies. African thinks tanks have not yet focused sufficiently on these issues due to funding and capacity constraints, lack of access to the ongoing dialogues, and lack of demand by international fora and organizations.
The goal of this initiative is to change that. Within six months, the initiative aims to see policy proposals emanate from African experts and think tanks and start to interact with ongoing global conversations on how to reshape the finance for development global architecture. To get there, there is a need to support a process of engagement, knowledge sharing, and research and advocacy with a select group of African think tanks, policy institutes, and thought leaders. This process will lead to a better understanding of the global financial architecture challenges. It will also lead to African-led analysis, research, and perspectives that will be translated to policy briefs for African leaders, and advocacy content for TLP to use in advancing the cause of reform. These engagements should provide opportunities for global experts and African experts to share ideas and identify solutions.
We will organize a monthly series of knowledge-sharing engagements of African think tanks with ACET and FDL experts, TLP members, African policymakers, and MDBs representatives. Each knowledge meeting will focus on a particular issue for the global financial architecture, such as SDR allocation; climate finance; IMF loans, conditionality, and DSAs; MDB reforms, etc. Each engagement will be anchored by a global expert. These engagements intend to be participatory and foster reflection and dialogue.
As the knowledge-sharing engagements are underway, ACET and FDL will explore with the African think tanks important themes or topics for joint or collective analysis and research to further inform African policymakers’ positions on the global financial architecture. For example, this may be country-specific analysis to understand how different MDB policy changes would impact a particular country or group of countries (low income v. low middle income for example). Or the analysis may explore what African governments and institutions such as the African Union can do to accelerate access to capital markets, reduce debt burdens and increase investments in climate adaptation.
ACET and the TLP will support dissemination of the research outputs, particularly to African policymakers and Heads of State. The analysis can be used to engage global stakeholders and use the policy recommendations in advocacy efforts to amplify African perspectives and Africa’s collective voice.
The partnership among ACET, the FDL, and other African think tanks on the topic of global financial architecture will evolve into a long-term collaboration to collectively address key issues related global and continent-wide issues that might otherwise not be an area of focus for African think tanks. Partners already enrolled in the initiative include the following.
Regional-focus think tanks
Country-focus think tanks
African Center for Economic Transformation
African Economic Research Consortium
Centre for the Study of the Economies of Africa
Policy Center for the New South
South African Institute for International Affairs
Institute for Strategic Studies
AUDA-NEPAD Policy Bridge Tank
If you are interested in being part of this initiative, please write to Rob Floyd.