African leaders used the second day of a summit with French President Emmanuel Macron on Tuesday to push for easier access to credit that could help fund major investments.
The campaign by African governments for reforms aimed at reducing borrowing costs gained momentum on Monday after Macron said he supported creating a first loss guarantee mechanism to reduce investment risk on the continent.
He also said he would push for the proposal at next month’s G7 summit.
African governments argue that lenders often viewed the continent as riskier than it actually is, making borrowing far more expensive.
“The issue is not liquidity. It is risk architecture,” Kenyan President William Ruto said during remarks at the Africa Forward Summit in Nai.
At Macron’s invitation, Ruto would attend the G7 summit in Evian les Bains, France, where he hopes to build support for the proposed reforms.
More than 30 African leaders, heads of multilateral financial institutions, and business executives from Africa and France are attending the summit, which is the first France has hosted in an English-speaking African country.
France hopes the event, which Macron said has mobilized 23 billion euros, 27.01 billion dollars, in investments across Africa to help rebuild partnerships on the continent, after its influence weakened in several former colonies in West Africa.
African countries also sought changes to credit risk ratings
U.N. Secretary General Antonio Guterres said African countries faced borrowing costs that are on average twice as high as those of advanced economies.
“That is not a market verdict on Africa. It is a verdict on the injustices of the system,” he told the summit.
African governments have repeatedly criticized what they described as unfair assessments by credit ratings agencies that exaggerated the continent’s investment risk.
Major ratings agencies, including S&P Global Ratings, Moody’s, and Fitch Ratings, rejected claims of regional bias and say their ratings were based on globally applied and publicly available criteria.
Macron’s proposed first loss guarantee mechanism is designed to encourage more private investment into African economies.
The idea forms part of a wider effort to attract private capital as wealthier countries reduced development financing in favor of defense spending and domestic priorities.
Although several G7 nations have expressed support for making global financial institutions more responsive to African concerns, it remained unclear how much backing specific reform proposals would receive.
Reuters/NAN
