President William Ruto has asked Development Partners to offer Africa long-term concessional loans for accelerated development.
He noted that many African countries are burdened by costly loans, with one in four spending up to 70 per cent of their revenue on repayments.
“African nations pay interest rates of up to five times higher than developed nations. This has made sustainable growth elusive as more funds are allocated to debt refinancing than to sectors like health and education,” President Ruto said at the World Bank Group’s International Development Association (IDA21) Africa Heads of State Summit in Nairobi.
President Ruto observed that Africa requires loans with repayment periods of up to 50 years to allow nations sufficient time to develop while repaying these loans.
“With long-term financing, Africa can transition to low carbon economies and fight climate change, the biggest threat now. High interest rates complicate refinancing, destabilise currencies and lead to high debt,” he said.
President Ruto said IDA remains the only saviour for the continent in terms of financing thus called for increased funding of the association.
“If there is a case to be made for win-win outcomes, IDA is the best example. Through IDA, both donor and recipients win. Donors will put money in energy for instance so that Africa can continue with industrialisation, then Africa can share the outcomes with the world,” he said.
He noted that investing in IDA would unlock Africa’s economic potential.
“By investing in IDA, we are unlocking the potential for green energy development and decarbonisation. By investing in IDA, we are unlocking the human resource potential, enabling Africa to provide up to 40 per cent of global labour by 2030. Significant capital injection in IDA is necessary and crucial,” said the President.
President Ruto urged development partners to join Africa in a historic moment of unity to increase their funding to IDA from $93 billion in 2022 to $120 billion in 2024. He added that this increased funding would help Africa address the devastating effects of climate change.
“Kenya and East Africa currently face severe floods; concurrently Southern Africa is grappling with the worst drought. These highlights Africa’s vulnerability to climate change,” he said.
President Nana Akufo-Addo of Ghana stated that IDA exemplifies the power of international cooperation by lifting millions from poverty and building resilient health and education infrastructure.
Africa requires about $130 billion annually for infrastructure, he said, but funding gaps have hindered development.
“Mobilising funding is Africa’s biggest challenge. Global countries have not allocated adequate resources for Africa’s development. With a fast bulging population, we must provide funding for education, electricity and education facilities,” he said.
Ms Samia Suluhu, the President of Tanzania, said Africa needs more concessional resources, as she called for IDA21 to focus on providing 50-year loans to give countries time to repay.
“IDA21 replenishment should match Africa development aspirations,” she urged.
Dr Julius Maada Bio, the President of Sierra Leone, observed that Africa needs decisive and collaborative efforts from governments and partners like World Bank to develop.
“For IDA to remain relevant, it must adopt innovative financial solutions that cater for Africa’s needs. Sierra Leone endorses Nairobi communiqué on IDA for sustainable growth. We are optimistic that provision for additional resources will support our dream for a climate-smart Africa,” he said.
Other Heads of State and Governments at the event are President Yoweri Museveni of Uganda, President Évariste Ndayishimiye of Burundi, President Lazarus Chakwera of Malawi, President Azali Assoumani of Comoros, President Mohamed Ould Ghazouani of Mauritania, President Faustin-Archange Touadéra of Central African Republic, President Andry Rajoelina of Madagascar, President Hassan Sheikh Mohamud of Somalia and Prime Ministers Abiy Ahmed Ali (Ethiopia), Amadou Oury Barh (Guinea) and Nadir Larbaoui (Algeria).
The leaders called for increased long-term financing for Africa, noting expensive loans have become a burden to the continent, slowing down its development.
The Summit sought to support the replenishment of IDA resources, an institution that “invests in the future of people and planet, with projects across 75 countries,” according to the World Bank.
IDA was established in 1960, and it aims to “reduce poverty by providing grants and zero- to low-interest loans for programmes that boost economic growth, reduce inequalities, and improve people’s living condition.”