By Kizito CUDJOE
Major donors and the World Bank are considering a US$105billion cap for the replenishment of the International Development Association (IDA), falling short of the US$120 billion sought by African leaders, a new report by the African Future Policies Hub revealed.
The report, ‘Assessing Progress toward Reforming the Global Financial Architecture: An African Perspective’, highlights slow progress in addressing Africa’s climate financing needs, debt challenges and financial transparency gaps.
It emphasises the need for urgent reforms in the global financial system, particularly regarding the International Monetary Fund’s (IMF) quota system and the role of multilateral development banks (MDBs).
The IDA, which provides concessional loans and grants to the world’s poorest countries, is a critical lifeline for many African countries.
However, the report warns that without increased commitments, the region risks further delays in achieving sustainable development and climate adaptation goals.
The Senior Policy Lead at the African Future Policies Hub, Maria Nkhonjera, in a press statement on the release of the report, said: “The assessment shows little to no progress is being made on addressing the continent’s debt concerns”.
This also includes high cost of borrowing and actual disbursements against financial commitments and pledges, which Nkhonjera said put into question transparency and accountability frameworks in the financing ecosystem.
The key findings of the report note International Monetary Fund’s (IMF) quota imbalances, where African countries continue to hold a disproportionately small share of voting power, limiting their influence in financial decisions.
It also revealed that African Union’s (AU) admission to the G20 and the appointment of a third Sub-Saharan African representative to the IMF executive board mark steps toward stronger representation.
“Although progress has been made in loss and damage financing, commitments for adaptation finance remain insufficient. African nations continue to receive international climate funds primarily as loans, often at market rates, posing a significant challenge.”
Daouda Sembene of AfriCatalyst said: “Africa continues to rely on loans rather than grants or concessional finance, an unsustainable trend that must be reversed”.
The report also highlights limited reforms at MDBs, with key African priorities, such as the re-channelling of Special Drawing Rights (SDRs) through the African Development Bank, yet to be fully operationalised.
The G20 Common Framework for Debt Treatment remains largely unchanged, with slow progress in addressing high borrowing costs and lengthy debt resolution processes.
However, the report notes significant steps toward a UN tax convention, which could help tackle tax avoidance and boost fiscal capacity in African economies.
Furthermore, it stressed the importance of securing adequate financing ahead of COP29, where critical decisions on climate finance will be made. African countries are pushing for a new collective quantified goal (NCQG) based on their needs to fund climate adaptation and mitigation efforts.
Faten Aggad of the African Future Policies Hub said: “Despite some positive developments, much work remains, especially in delivering new and additional finance on the scale needed to support Africa’s climate and development goals.”
Iskander Erzini Vernoit of Imal Initiative for Climate and Development also argued that reforming global financial structures is crucial, particularly for Africa in relation to the UNFCCC.
‘Significant international grant-equivalent funding is essential, amounting to hundreds of billions, to effectively tackle mitigation, adaptation and loss and damage needs,’ Vernoit added.
African leaders are also urging developed nations to meet the UN’s Official Development Assistance (ODA) target of 0.7 percent of Gross National Income, warning that current funding levels are in decline.
The report emphasises the importance of political pressure and advocacy to drive meaningful reforms in global financial governance and unlock the trillions needed to finance sustainable development across Africa.
