By Clarisse Hida & Joël Ruet
As the Summit on the financing of the African economy will be held on May 18, 2021 in Paris, at the invitation of Emmanuel Macron and with the African heads of state and government, solutions must go well beyond refinancing of sovereign debt, to integrate the dynamics of an African financial system undergoing a great transformation, and must include the banking sector, both at the level of the private sector and of commercial banks.
Africa has been resilient since the economic crisis of 2008 with controlled debt until the covid pandemic, and, for many countries, debt has been raised in connection with a transformation, an extension of the tax base, with margins remaining in this in terms of debt sustainability. But above all the continent, and in particular sub-Saharan Africa, has demonstrated a real boom in its economies, served by the growth of pan-African banks, which now desreve better support internationally.
But today Africa remains underbancarised, and a “classic” treatment of African economies by the tools of the banking system possibly supported by a multilateral public tool for the correct assessment of risks, including the issues of “rating”, looks promising.
Key Take-aways :
► The issue of financing the African growth should be approached through:
– Maintaining development assistance in the context of COVID-19 which, in itself, does not constitute a specific risk for Africa.
– The revival of public and private foreign investments in Africa, by improving the perception of African opportunities, including a fairer rating of private and sovereign financial assets.
– And finally, through support the access to capital markets for commercial banks since it is clear that many banking regimes are sound and should not be underestimated.
► In each of the avenues proposed, the international community must play an integrating or intermediary role that goes beyond the framework of development aid.
► This triple approach would make it possible to tap new types of financers, who would be able to better understand the specificities and strategies of African countries, particularly, but not only, with regard to debt and its refinancing.