Some stakeholders have called for urgent concessionary financing to help Africa build resilience against shocks and boosts its economic growth.<\/p>\n\n\n\n
They said this was crucial, especially with financial, health and climate shocks threatening to reverse two decades of development progress in Africa.<\/p>\n\n\n\n
They spoke during a one-day virtual workshop on \u201cCatalysing Access to the International Monetary Fund\u2019s (IMF) Resilience and Sustainability Trust, RST\u201d, organised by AfriCatalyst and the Economic Commission for Africa, ECA.<\/p>\n\n\n\n
The stakeholders said that a mix of shocks had increased Africa\u2019s development financing gap and debt vulnerability.<\/p>\n\n\n\n
\u201cThis includes food and fuel impact of the Russia-Ukraine war, climate change impacts, conflict, and tighter global financial conditions, \u201d the experts said.<\/p>\n\n\n\n
The Director of ECA, Macroeconomics and Governance Division, Adam Elhiraika, said that over the last six decades, every global recession led to a rise in global government debt.<\/p>\n\n\n\n
Public Debt<\/strong><\/p>\n\n\n\n According to Elhiraika, many African countries have also increased their public debt.<\/p>\n\n\n\n He said a bulk of the public debt was incurred between 2020 and 2021 when countries sought to combat the impacts of the Covid-19 pandemic.<\/p>\n\n\n\n The ECA official said as a result, many countries were struggling with high debt and servicing it, stating that this was impeding poverty reduction and hindering their recovery from shocks.<\/p>\n\n\n\n \u201cIn spite of national and international efforts, an increasing number of countries on the continent continue to struggle with substantial debt burdens and servicing their debt.<\/p>\n\n\n\n \u201cSome are already in debt distress or at high risk of debt distress, which is impeding resilience-building to future shocks, which is key for sustainable development,\u201d he said.<\/p>\n\n\n\n The director said in a bid to help to develop and assist lower-middle-income countries build resilience to external shocks and achieve sustainable growth, the IMF established RST.<\/p>\n\n\n\n Under the RST is the Resilience and Sustainability Facility, RSF, an innovative financing instrument to help countries address long-term structural challenges, including climate change adaptation, mitigation, and pandemics.<\/p>\n\n\n\n \u201cAfriCatalyst, an-Africa based global development advisory firm, has developed a practical guide to inform policymakers and domestic stakeholders about the RSF\u2019s key features, eligibility criteria, and objective policy,\u201d he said.<\/p>\n\n\n\n According to Elhiraika, the guide also explores how IMF assistance under the RST can support the design and implementation of national macroeconomic policies.<\/p>\n\n\n\n \u201cThis is to integrate climate and pandemic risks and the cost of adaptation into their macro-fiscal frameworks,\u201d he said.<\/p>\n\n\n\n AfriCatalyst Founder and Chief Executive Officer, CEO, Daouda Sembene said the RST had potential benefits for African countries reeling under high indebtedness.<\/p>\n\n\n\n He said with the support of the Bill and Melinda Gates Foundation, AfriCatalyst was bolstering evidence generation and technical advisory support for African policymakers.<\/p>\n\n\n\n Sembene said the support would enable it to promote access of Sub-Saharan African countries to IMF financing under the RST.<\/p>\n\n\n\n The chief executive said there was high demand for climate financing, but available resources were limited.<\/p>\n\n\n\n Moreso, Sembene said the IMF was currently seeking 40 billion dollars for the RST but had only effectively raised 26 billion dollars.<\/p>\n\n\n\n \u201cAfrican countries need additional resources. The accumulate climate finance of 52 African countries under the Nationally Determined Contributions is estimated at 2.3 trillion dollars,\u201d Sembene said.<\/p>\n\n\n\n Ms Fenohasina Maret, Senior Advisor, AfriCatalyst, said access to this financing would be granted based on the nations\u2019 reform strength and debt sustainability.<\/p>\n\n\n\n According to Maret, concessional loans have a 20-year maturity and a ten-and-a-half-year grace period.<\/p>\n\n\n\n She said: \u201cborrowers will pay an interest rate that is a modest margin over the three-month SDR rate, with the poorest countries getting the most favourable financing terms.<\/p>\n\n\n\n \u201cRwanda is currently the only African country with an RSF-supported programme approved by the IMF. It received 319 million dollars to be used for climate change programming.\u201d<\/p>\n\n\n\n Senior Adviser Ali Mansoor, a former IMF Assistant Director and Mission Chief, said that Rwanda had embedded climate issues into national strategies for transformation.<\/p>\n\n\n\n Mansoor said that during COP27, Rwanda inaugurated its \u201cIreme Invest\u201d programme to fund green projects for small and medium enterprises.<\/p>\n\n\n\n According to him, Rwanda will use the RSF to catalyse further financing and organise better planning within their budget process for risks related to climate change.<\/p>\n\n\n\n He added that they would also use the RAF in accrediting their Ministry of Environment under the Green Climate Fund and the Adaptation Fund.<\/p>\n\n\n\n