“International Financial System Skewed Against Africa; Reform It Now” – President Akufo-Addo – African Business

Nana Addo Dankwa Akufo–Addo is the President of the Republic and has called for urgent reform of international financial systems, as current monetary system favors developing countries.

According to President Akufo-Addo, “the financial markets have been set up and operate on rules designed for the benefit of rich and powerful nations, and, during times of crisis, the façade of international co-operation, under which they purport to operate, disappears.”

Taking his turn to speak at the United Nations General Assembly, on Wednesday, 21st September, in New York, the President stated “these are the savage lessons that we have had to take in, as the world emerged from the grip of the coronavirus to energy and food price hikes, and a worldwide rise in the cost of living. The necessity for reform of the system is compelling.”  

Stressing that “our world is currently not in a good place”, he recalled an observation by the World Bank which has described the global economy as “enduring its steepest slowdown since 1970.”

The world was facing a severe global economic crisis, which pushed Africa into its worst recession in half a century. President Akufo Akufo Adu-Addo stated that the continent was now facing a slump in productivity, revenues, increased spending pressures, and spiralling public debts. 

“As we grappled with these economic challenges, Russia’s invasion of Ukraine burst upon us, aggravating an already difficult situation. We are directly feeling the effects of this war in Africa, not just the dismay we feel at the deliberate destruction of European cities and towns in 2022. Every bullet, every bomb, every shell that hits a target in Ukraine, hits our pockets and our economies in Africa,” he said.

Describing global inflation as “the number one enemy this year”, President Akufo-Addo noted that “it hit a 40-year-high in the US and UK in recent months. Inflation is at an all-time high in the euro area. Several African countries have inflation rates surging three to four times higher than what they were just two years ago.”

In Ghana, the President indicated that “we are experiencing the highest inflation for 21 years. The high costs of food are hurting the poor, especially the urban poor, the most.” 

According to the President, the spillover from central banks raising interest rates around the world to combat inflation has been severe beyond borders as global investors pull money from developing countries to invest in bonds in developed nations.

He explained that this has led to decreased currencies and higher borrowing costs. Therefore, Africa’s economies must raise and spend more of their own currencies in order to service foreign debts in US Dollars.

“It has become clear, if ever there was any doubt, that the international financial structure is skewed significantly against developing and emerging economies like Ghana. The avenues that are opened to powerful nations to enable them take measures that would ease pressures on their economies are closed to small nations,” he said.

To make matters worse, President Akufo-Addo noted that “credit rating agencies have been quick to downgrade economies in Africa, making it harder to service our debts. The tag of Africa as an investment risk is little more than, in substance, a self-fulfilling prophecy created by the prejudice of the international money market, which denies us access to cheaper borrowing, pushing us deeper into debts.”

History, the President stressed, “will judge us harshly if we do not seize the opportunity to make the changes that will enable us deal with the many problems we face.”

Sahel Conflict

Touching on the conflict in the Sahel, President Akufo-Addo noted that the conflict has moved from the Sahel, inexorably, to the West African coastal countries, with all of Ghana’s neighbours suffering terrorist attacks, with some losing territorial space to the invading forces.

The terrorist pressure, he explained, the terrorist pressure has provided a pretext for the unhappy reappearance of military rule in three (3) of the fifteen (15) member ECOWAS Community, two (2) of whom have borne the brunt of the terrorist outrages in the Region – Mali and Burkina Faso.

“All of us in the Region are being forced to spend huge amounts of money on security. This is money we should be spending on educating and giving skills to our young people; on building much needed roads, bridges, hospitals and other such infrastructure, which we are spending to fight terrorists or to keep them out from destabilising our countries.”

This, President Akufo–Addo says, is a global problem that needs to be addressed by the entire world community.

Distributed by APO Group, Republic of Ghana, on behalf of The Presidency.