Calls for reform of international system to better respond to crises 

Africa was a victim of global events in which it had no part, said Vera Songwe, ECA Secretary General and UN Under Secretary General.

Speaking at the opening session of the Council of Ministers 2022 meting in Dakar, she said the continent was fighting many wars – against climate change, against poor governance, terrorism and on other fronts.

“Ministers of finance have been at the forefront of many of these and have shown “legendary resilience”.  

She referred to the different crises which the continent now found itself facing. “We though it {Covid-19} was just a pandemic but then realised we also had an economic crisis.” Coupled with a new crisis – Russia’s invasion of Ukraine and the attendant effect on prices of key commodities – was affecting countries’ ability to plan and by extension, their trajectory towards growth and prosperity.

“We are facing several exogenous shocks and because of them, we are going to have to see how we can reorient our course.”

Solutions included examining how the financial system can change. One area that needed to be tackled more decisively was the search for ways to strengthen domestic resources. “We have spoken about it a lot but have not even got to 30% of internal revenue mobilisation.”

Rebecca Grynspan, Secretary General of the UN Conference on Trade and Development (UNCTAD),  said African countries were indeed facing a perfect storm and they were not alone. More than 100 nations globally are being affected by of the dimensions of crisis, whether it be the fallout of Russia’s war with Ukraine, climate change or the impact of the pandemic.

But developing countries were particularly hard hit as they are most vulnerable, with most experiencing rising inflation and debt distress. “We need to bring instruments to the table to help cushion the blow.”

More flexibility was needed to respond to exogenous shocks, she said. “We also need liquidity and debt instruments for an orderly and rational way of dealing with these current crises.”

Michael Camdessus, former managing director of the IMF, criticised the size of the allocation to Africa from the $650bn in new Special Drawing Rights (SDRs) to its members to combat the effect of Covid-19. 

Just $33bn of this is directed to Africa, despite it being one of the regions of greatest need. “This shows the inadequacy of the existing system to deal with the issues,” he said.

This showed the urgent need for international monetary architecture reform to ensure better support for Africa and other regions in need. 

“We cannot dream of a radiant future for the planet if we don’t look inwards to the continent where most of the young people in the world live.” 

Ngozi Nkonjo Iweala, Director General of the World Trade Organisation, said trade was an important part of the policy mix needed to deliver equitable and sustainable growth. 

Trade had been increasing in recent times as the pandemic eased and there had been no rush to exit from global value chains, even though businesses had had to shift their strategies. 

“But Russia’s war on Ukraine had “cast a shadow”. Although the two countries represented a low share of global trade they were “outsized” suppliers of a few critical goods.  

She warned that trade had started to become infected with mistrust and toxic narratives, particularly in the China-US axis. 

Trade has been a driver of resilience and recovery overall. “But the weaponization of trade will increase the risk of uncertainty in the world.”