IMF/World Bank Meetings: Testing Ground For African Caucus Resolutions

The 2024 Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) will take place from Monday, October 21 to Saturday, October 26.

Unlike the past IMF sessions, the forthcoming meeting would be strategic to representatives from African continent for a number of reasons. The meeting is coming close to the conclusion of African Caucus Meeting of the World Bank Group and the International Monetary Fund (IMF), which was held from August 1-3 in Abuja, the capital city of Nigeria, that had in attendance, African continent’s central bank governors, ministers of finance in the Africa region, World Trade Organisation (WTO), African Development Bank (AfDB) and economic eggheads from various African continents.

Unlike the past IMF meetings, the October session would present an incredible opportunity to put to test some of the key resolutions arrived at the recently concluded 2024 African Caucus Meeting.

Caucus as the continent’s compass

For the first time, African central bank governors, ministers of finance from the continent, and other strategic representatives of economic blocks from the region, along with representatives from the World Bank, IMF and AfDB, gathered last August in Abuja under the auspices of 2024 African Caucus Meeting.

The threeday strategic gathering was held in Abuja. Germane to the African caucus meeting is the elimination of bottlenecks hindering hitchfree intra African trade. But more importantly is the continent’s quest to have a common position at the global financial session, such as the IMF/ World Bank meetings, World Economic Forum, and the like.

With a solo voice on matters of trade and finances, the African continent will be able to oppose decisions considered unfavourable to the continent.

The African Caucus came against the backdrop of a sustained campaign for a look at the global financial system, which African economic leaders agree favours developed economies to the detriment of developing countries, many of which are grappling with debt crises.

Trade as a rallying point

For many years past, the African continent had yet to reap full gains inherent in the African Continental Free Trade Area (AfCTA) conceived in 2018, with 43 African nations signed up for it.

The African caucus meeting took a holistic view of some of the hindrances to the realisation of AfCTA. The meeting recognised the importance of intra-African trade in unlocking production, investments, and jobs in Africa.

It also took cognisance that African countries continue to trade with the rest of the world more than among themselves.

The meeting agreed that addressing both tariff and non-tariff barriers to intra-African trade—including fragmented payment ecosystems, poor energy access, a lack of infrastructure, inconsistent regulatory frameworks, and divergent crossborder procedures— was critical to bolstering Africa’s share of global trade and stimulating sustainable and inclusive growth in the conti nent. –

The meeting also underscored the point that trade could stimulate economic growth by creating opportunities for increased production, investment, and job creation. It provides access to larger markets, new technologies, and capital.

The African Continental Free Trade Area (AfCFTA) aims to promote trade among African countries by reducing trade barriers, harmonising regulations, and facilitating the movement of goods and services within the continent.

Speaking to the importance of trading among the African conti – nent, WTO Director General, Dr. Ngozi Okonjo-Iweala, in her remarks delivered virtually, acknowledged the importance of continental free trade as a tool that will help turn the continent into a stronger base for producing for local markets and for attracting investment.

“This will help African economies sustain better foreign exchange earnings in the years ahead. But the road ahead is long, according to you and data for 2021 only 13 per cent of Africa’s goods was intra-regional, compared to 21 per cent for Southeast Asia 39 per cent for the US, Mexico and Canada and South.

Africa accounts for only about three per cent of global groups rate and an even lower proportion of global services,” said Iweala. The Nigerian former minister for finance said more trades and value additions were necessary to create the better jobs that the continent’s young people desired.

“A greater regional economic integration will contribute directly into the larger unified markets . The African continental free trade area will help turn the continent into a stronger base for producing for local markets and for attracting investment.

This will help African economies sustain better foreign exchange earnings in the years ahead,” she said. She added that the WTO was working with the World Bank to improve digital infrastructure in several African countries.

A greater regional economic integration will contribute directly into the larger unified markets

“The bank is bringing funding for building our infrastructure while we’re bringing expertise for the soft infrastructure,” Dr. Iweala said. The African Export-Import Bank (Afreximbank) wasn’t left out in the crave to make the African continent enjoy hitch free intra trading activities.

The bank said it planned to double its financing of intra-African trade from $20 billion in 2021 to $40 billion by 2026. Mr. Haytham ElMaayergi, Afreximbank’s Executive Vice President, Global Trade Bank pledged at the session.

Mr. ElMaayergi represented Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank.

Mr. ElMaayergi said that Afreximbank had been a champion in facilitating intra-African trade since its founding and that it had committed $1 billion to support the funding of the AfCFTA Adjustment Fund and a $10-million grant to facilitate the establishment and operationalisation of that fund.

“The bank is also partnering with the AfCFTA Secretariat and the African Union Commission (AUC) to ensure a successful implementation of the Pan-African Payments and Settlements System, the African Trade Gateway and the Afreximbank African Collaborative Transit Guarantee Scheme,” he continued.

Tackling economic challenges

The Caucus meeting of African central banks was more deserving in a number of ways, especially coming ahead of October IMF/ World Bank meetings. The knotty issues of high cost of debt service and borrowing were dissected at the caucus meeting.

Nigeria’s Central Bank Governor and Co-chair of the African Caucus meeting, Mr. Olayemi Cardoso, was very frank in his address to the gathering. “As monetary authorities, we have the responsibility to formulate policies that enhance trade among countries on the continent.

We can achieve this by fostering a financial landscape that encourages collaborative research and development (R&D) to support our industries and generate economic wealth for our growing populations.

“Decisions on currency convertibility, cross border transactions, payment systems, Cross-border movements of our peoples, goods, and services, as well as financial policy, will be instrumental in determining the success of the AFCTA,”.

said Cardoso. In referencing Nigeria as an example of every other African nation with economic challenges, Cardoso spoke of policy reforms undertaken by the government to restore calm in the finance service sector.

“We are committed to the vision of a united and economically integrated Africa. By sharing our experiences, including both successes and setbacks, we aim to contribute to paving the path toward sustainable and inclusive economic growth that benefits all citizens across the continent,” he said.

Adding his voice to Africa speaking with one voice, Dr. James Alic Garang Governor, Bank of South Sudan, and Chair of the Monetary Affairs Committee for the East African Community, said given the massive economic potential of the continent, it became imperative of the continent to speak with one voice especially when it comes to the issue of IMF and World Bank.

“I think this is one of the issues that will be tackled in the memorandum and also in the declaration. There is a need to reform global financial architecture. It revolves around many things, but I’ll just highlight three things.

One is there is a need to reduce the cost of borrowing and enhance access to finance, as well as harmonise policies among us and ensure that the voices of Africa are heard on the table.

“This is the point that we heard earlier, where Ambassador Amina Mohammed was talking about the G 20. And also, Ambassador Albert M. Muchanga of the EU Commission. They were talking about what can be done to ensure that Africa sits at the table where decisions around global financial architecture are met.

So, these are some of the things that are going to be coming up in the memorandum. The other two things will, of course, revolve around issues that have to do with access to energy. And this is the area where African Development Bank and the World Bank are taking the lead role to support the continent,” Garang said.

He said the African continent Central Bank governors were concerned about the rising population of youths, as pointed out by one of the guest speakers noting that an actionable plan would be developed.

Last line

The IMF/World Bank meeting is less than two months away. The Washington, DC ground would be the best place to test major resolutions arrived at the Abuja African Caucus 2024 meeting.