In a fiery speech in which he criticised international organisations for giving Africa a bad deal, Macky Sall, President of Senegal and current Chairman of the African Union, also recognised the leading role played by the African Development Bank and Afreximbank in supporting development.
However, Sall argued that the current deal for Africa in the international system is a handbrake on its development.
“The rules are unfair, outdated, and need to be disputed,” he told delegates attending the ECA’s Conference of African Ministers of Finance, Planning and Economic Development in Dakar’s plush conference centre yesterday.
Risk is overstated by rating agencies and the system is skewed negatively towards the continent generally, he said.
This has made it impossible for countries to borrow money at fair rates, even if “the return on investment is greater in Africa than anywhere else”.
He spoke about the high-speed train that was completed within five years and started running in late 2021. There were many other major projects that were funded and delivered on time, he said.
“Explaining under-development in Africa is very simple. The rules set up by international institutions have put us in a straitjacket.”
It is time for Africa to speak out. The voices should not just be those of leaders but of finance ministers and others affected by a system that works against the continent. “We must look for innovative solutions. “
Sall called for a new deal on Special Drawing Rights, which he confessed has been an obsession of his for the past year.
He regretted that Africa had received a mere $33bn of the $650bn allocated for Covid-19 recovery, with the US, Japan, China and Germany receiving more allocations individually than the whole continent.
He said this highlights the weighting given to Africa in the global economy by the Bretton Woods institutions.
“The allocation doesn’t meet the scale of the crisis we are facing. What must Africa do? What is our place in the world?” he asked.
“We must be brave enough to question this. We are told we can no longer ask for reallocation of the SDRs. But we must talk about a new allocation as countries have already drawn down on this.”
In addition, Sall pointed out the high cost of borrowing from the OECD which slows development in Africa. He said interest rates should be lowered to 5%, compared to the actual 15%, and he will engage in a discussion with member countries in Paris in June to reconsider the credit terms.
“We don’t want to hear about financial aid anymore. We are making economic partnerships and we want fair access to the financial market,” he said.
He said Senegal had diversified partnerships with different parties and it was not looking for exclusive partners “as long as our interests are being served”.
Sall called on central banks to allow more flexibility on monetary policies which often constrain African countries’ spending. Solutions include the introduction of long-term loans in exchange for sizable infrastructure projects, without unrealistic conditions.
“We want to change the rules of credit. Let’s look at the reality and make sure the terms support development.”
The war in Ukraine is compromising Africa’s post-pandemic recovery and the continent had to act collectively to address this new challenge, which was pushing up prices and increasing inflation in African countries.
Sall said he had a mandate from his African peers to go to Moscow to ask Russian President Vladimir Putin to allow Ukraine to be able to export grain. He said some sanctions should be removed to alleviate Africa’s suffering in the wake of the war.