President Hichilema Hakainde of the Republic of Zambia has expressed concern that national incomes for African countries remained low coupled with high inequality and poverty rates partly due to huge infrastructure deficits and low levels of human development and private investment.
To address this the Zambian President underscored the need for Africa to access low-cost capital and a establish predictable, competitive and stable economic policy environment.
“I am greatly convinced that the importance of the African Union Financial Institutions has been well established and very well-articulated in a way that it has now become common knowledge amongst the wide variety of stakeholders involved in this inspiring and expected ground-breaking journey,” President Hichilema has stated.
President Hichilema stated in a speech read on his behalf at the AU Member States Ministers of Finance, Monetary Affairs, Economic Planning, and Integration which focused on “Improving Africa’s access to Capital: Debt Management and the Rising Influence of Credit Rating Agencies.”
A document made available to the Ghana News Agency in Tema explained that the 5th Ordinary Session of the Specialized Technical Committee also made far-reaching recommendations on assessments by the Member States on the state of the debt crisis in their respective countries as a way of promoting transparency and accountability, which in turn facilitates debt restructuring and reduces vulnerabilities.
To address longer-term challenges and achieve financial stability and autonomy, President Hichilema stressed the need to speed up the operationalization of African financial institutions as indicated in Article 19 of the Constitutive Act of the African Union.
Ambassador Albert Muchanga, African Union Commissioner for Economic Development, Trade, Tourism, Industry and Minerals, reiterated the need to accelerate domestic resource mobilization to reduce reliance on foreign capital.
He said AU Agenda 2063 stipulated that for it to be fully and effectively implemented, 75-90 percent of financial resources must be mobilized domestically across Africa.
“As we harness the spirit of innovation, one key issue that we need to realize is that the African Union is a source of value creation. It is a brand that is lucrative politically, diplomatically, strategically; and, inter-alia, commercially.
“Therefore, AU policy organs like this Specialized Technical Committee (STC) need to come up with ways and means of transforming this source into value capture to drive our progress as a continent, and in this way, relying on our own resources,” Ambassador Muchanga stated.
Dr. John Ampontuah Kumah, Chair of the Bureau of the STC and Deputy Minister for Finance of Ghana, noted that additional structural reforms such as debt restructuring and reprioritizing public spending were required to ensure long-term debt sustainability.
“We need to collectively work together to transform Africa into a global powerhouse of the future.
“Reconfiguring the global debt relief architecture, including reinstating the Debt Service Suspension Initiative (DSSI), will be crucial in supporting debt-ridden African countries’ transition towards a path of sustainable debt in the medium to long term," Dr Kumah stated.
The Ministers of Finance and Central Bank Governors at the end of the meeting recommended the establishment of a regulatory institution in Africa to strengthen mechanisms for tax transparency, effective and prudential fiscal management and combating illicit financial flows.
The Ministers reiterated the need to establish an African Credit Rating Agency based on self-sustainability and political and financial autonomy, and adopt the Tax Strategy and the Strategy on curbing Illicit Financial Flows (IFFs).
The STC meeting accepted the proposal of Afreximbank and ATIA to be designated as AU Specialized Agencies.
The STC requested AU Member states to ensure a significant proportion of their annual budgets are committed to the financing of industrialization projects, supported by prudential taxation policies and practices to enhance domestic resource mobilization, to minimize rigidities in credit creation.