African Leaders Demand Overhaul of Global Financial System at Economic Summit

At a major economic conference in Kenya this week, African leaders emphasised the urgent need to reform the global financial system, which they argue unfairly burdens African nations with exorbitant borrowing rates.

African Development Bank (AfDB) President, Dr. Akinwumi Adesina, condemned the “so-called Africa risk premium,” which forces countries on the continent to borrow at higher rates than other nations with similar credit ratings.

In many African countries, tontines—a popular collective savings system—have enabled those excluded from traditional banking to finance projects or emergencies. Recently, startups in Cameroon have digitised this age-old practice.

The call for financial reform has grown louder as African countries grapple with crippling debt and volatile exchange rates while striving for development.

The AfDB projects a 3.7 percent growth in the continent’s economy this year. While this is commendable given the global context, it falls short of what is needed to match population growth.

Kenyan President, Mr. William Ruto, speaking at the AfDB annual meetings in Nairobi, highlighted the theme of ‘transforming Africa’ and stressed the need for substantial financial resources.

“However, we face the rigid barrier of a global financial architecture that is fundamentally misaligned with our aspirations,” Mr. Ruto stated.

He pointed out that African countries often have to borrow on capital markets at rates significantly higher than those paid by other nations, sometimes as much as eight to ten times more. He called this an ‘unjust’ system.

Despite several years of limited access to international markets, Kenya managed to raise $1.5 billion in a new Eurobond in February at around 10 percent interest. In stark contrast, 10-year French government bonds currently yield around three percent.

Dr. Adesina echoed these concerns, noting that if Africa’s risks were assessed fairly, the continent could save $75 billion annually in debt service, according to the UN Development Programme.

He also reported that Africa’s real GDP growth is projected to be 3.7 percent this year and 4.3 percent in 2025, following a 3.1 percent increase last year despite numerous challenges.

President Ruto, a vocal advocate for reforming the global financial system, cautioned that “the pace of African development remains far behind its undeniable potential.”