Single currency and rating agency punted for Africa

A report by the Mo Ibrahim Foundation (MIF) has advocated measures to strengthen the security of private investors in Africa, such as the creation of a ratings agency and a single African currency, reports the Club of Mozambique. The MIF report ‘Financing the Africa We Want’ advocates reforming the multilateral financial system, but also increasing domestic taxes and combating capital flight. Sudanese philanthropist Mo Ibrahim also urged African leaders to ‘put their house in order’ and become more self-reliant, rather than relying on foreign aid from other countries. ‘It is time for us Africans to understand that we have to take care of ourselves. It is not acceptable for us to depend on the kindness and generosity of others. It is foolish, unacceptable and unreliable,’ he said during the Ibrahim Governance Weekend, the flagship event of the Mo Ibrahim Foundation, held every year in a different African country. In the face of increasing conflicts and cuts in foreign aid by Western countries, Ibrahim argued that African countries should use their own resources to boost the continent’s economic and social development. ‘We are a very rich continent, but we are a very poor people. Why? Because we are mismanaging our countries, our resources, our people,’ he stressed. According to data collected by the MIF, development assistance to African countries has fallen by 11 percentage points in the past decade.

Full report on the Club of Mozambique site

African countries should focus on developing liquid local debt markets in their home currencies to protect them from global volatility and fickle foreign investors, said Moody's global head of sovereign and subsovereign risk, Marie Diron, who was speaking on the sidelines of the MIF gathering. According to TimesLIVE, credit ratings for some countries on the continent have begun climbing after a rough cycle of cuts and outlook downgrades spurred by the stress the Covid-19 pandemic put on sovereign balance sheets. However, as trade wars and geopolitical risks roil global markets, the countries that are faring the best, such as Benin and Ivory Coast, are the ones that have beefed up local funding, Diron said. ‘Domestic funding, I think that has to bridge that gap,' she told Reuters. Diron said deep and liquid domestic debt markets had in part shielded SA's rating, and borrowing costs, from the turmoil of US President Donald Trump's adversarial approach to President Cyril Ramaphosa's Government.

Full TimesLIVE report