Rijkenberg Calls for Reform of Global Financial Architecture

By Phiwa Sikhondze

The Minister of Finance, Neal Rijkenberg, has put forth a strong call for the reform of the global financial architecture, to better serve Africa’s development needs.

The Minister made the rallying call during the African Union’s 7th Ordinary Session of the Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning, and Integration.

The session, chaired by the Minister for Finance, took place in Tunis, Tunisia, and was marked by a series of discussions aimed at enhancing macroeconomic and sectoral policy coordination across the continent.

Worth noting is that the Minister serves as the Chairperson of the Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration (STC FMAEPI) of the African Union Commission.

The meeting’s agenda was driven by the theme “Enhancing Macroeconomic and Sectoral Policies Coordination in Africa: Challenges, Opportunities, and Policy Priorities for Inclusive Growth and Sustainable Development.” It brought together distinguished representatives from across Africa, including Ministers of Finance, Monetary Affairs, Economic Planning and Integration, as well as Governors of African Central Banks.

Minister Rijkenberg, supported by Abner Dlamini, Director of Fiscal and Monetary Affairs, and Jabulane Dlamini, Deputy Director of Balance of Payments and Internal Affairs at the Central Bank of Eswatini, spearheaded the discussions.

The Minister emphasized the critical role of macroeconomic stability and the coordination of sectoral policies to ensure that Africa can achieve inclusive growth and sustainable development, as outlined in Agenda 2063.

The Chairperson’s statement underscored the urgent need for a coordinated approach to address the prolonged economic challenges posed by the COVID-19 pandemic, global insecurity, and climate change.

The statement highlighted that despite a projected rebound in growth, the continent’s average debt-to-GDP ratio remains high, necessitating a concerted effort to enhance policy effectiveness and drive sustainable development.

“Africa’s growth was estimated at 3.4 percent in 2023, down from 3.8 percent in 2022, but above the global average of 2.7 percent. Growth is projected to rebound to 3.8 percent in 2024 and consolidate at 4.2 percent in 2025, underpinning Africa’s continued resilience to shocks,” noted Minister Rijkenberg.

However, he stressed that this is still below the pre-pandemic average of 5 percent and far below the needed 7 to 10 percent level expected in the long run to achieve the Vision and Aspirations of Agenda 2063.

A key focus of the session was the African Union’s role as a permanent member of the G20, providing a unique opportunity to influence the global financial agenda and advocate for reforms that align with African priorities. The Chairperson emphasized the importance of common positions on critical issues such as debt treatment, carbon credit pricing, and the reform of the International Tax Architecture.

“The current international financial system is not fit for purpose to resolve Africa’s development challenges and even deal with the current crises,” Rijkenberg asserted.

He pointed out the inefficiencies of the G20’s Common Framework for debt treatment, which has been criticized for its lack of African representation and slow, ambiguous processes. He called for a reformed framework that can act with speed, volume, and magnitude in resolving debt issues.

On the matter of carbon credits, Africa’s role as the world’s largest carbon sink was highlighted, with Rijkenberg noting that the continent is significantly under-compensated.

“Africa is not getting what it needs to adapt to climate change,” he said, emphasizing that fair pricing of carbon credits could raise substantial funds for the continent. Currently, Africa receives just $30 billion per year for climate adaptation, while its needs are $277 billion per year, leaving a significant financing gap.

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