Priorities for an Equitable Reform of the Global Financial System

There is a growing consensus worldwide to overhaul the global financial system in light of current realities. This is particularly critical in Africa, where novel liquidity approaches, wider access to affordable public and private funding, and debt relief are vital. These shifts are central to building the continent’s capacity for sustained transformative growth and resilience in the face of climate challenges. Addressing Africa’s substantial financing requirements for resilient growth demands a complete re-evaluation of development finance strategies, coupled with innovative enhancements in financial instruments and mechanisms. Many sources of finance and existing tools do not favour Africa. Developed countries have resisted fundamental reforms to support the developing world with the climate emergency and other crises. We need an innovative global development finance ecosystem to unlock equitable international financing flows, while preserving the fiscal sovereignty of developing countries to pursue development pathways unique to their circumstances and realities.

Extensive consultations between African policymakers, the private sector, policy experts, and civil society show consensus regarding the foundational aspects that should support the restructuring of the global financial architecture.

Africa’s position on the reforms of the global financial architecture is predominantly constrained by a lack of affordable, reliable, and sufficient finance, juxtaposed with a debt crisis in certain nations, and compounded by extreme vulnerability to climate change. Rather than allocating increased funds to adaptation efforts, the majority of funds are directed towards mitigation, which is most profitable for financiers and lenders. Finance for mitigation is more than ten times the $56b (8.4%) available for adaptation in 2020. Addressing Africa’s substantial financing requirements for resilient growth demands a complete re-evaluation of development finance strategies, coupled with innovative enhancements in financial instruments and mechanisms.

This paper draws on a series of policy and reform proposals from African leaders. It builds on initiatives emerging from the Global South and puts forward a set of recommendations, reflecting Africa’s priorities in advancing equitable reform of the international financial architecture. This includes the ongoing work of African Ministers of Finance in UNECA – coordinated High-Level Working Group on the Global Financial Architecture, the Sustainable Debt Coalition, the Vulnerable Twenty Group (V20) “Accra Marrakech Agenda,” the African Group of Negotiators, the 2023 African Caucus and Bridgetown Initiative. It envisions that its proposals could act as a roadmap for climate finance talks and focal points to advocate for Africa’s agenda and strategic priorities at the global level and at pivotal moments.

Achieving the level of reforms proposed goes beyond simply increasing flows of capital, creating new initiatives and platforms, or making high-level political statements. Rather, it requires concerted action by a wide range of stakeholders committed to reshaping the foundational structure of the existing economic system. This agenda must be tailored and responsive to the unique needs of African and other developing countries.