Africa-Press. African leaders utilized the second day of their summit with French President Emmanuel Macron to advocate for easier access to credit, which could help fund significant investments and boost economic growth.
A years-long campaign by African governments for reforms to lower borrowing costs received a strong boost when Macron announced his support for establishing a first-loss guarantee mechanism to mitigate investment risks on the continent, stating he would promote this idea at the upcoming G7 summit next month.
African governments argue that they suffer from an exaggerated perception of risk among lenders, which can make credit prohibitively expensive. Kenyan President William Ruto stated in his speech at the “Africa Forward” summit in Nairobi on Tuesday, “The problem… is not liquidity, but the structure of risk management.”
At Macron’s invitation, Ruto will attend the G7 summit in Évian-les-Bains, France, hoping to build momentum for the proposals he will present there this week.
The Nairobi summit, the first hosted by France in an English-speaking country, includes over 30 African government leaders, as well as heads of multilateral financial institutions and business leaders from across Africa and France.
France aims to leverage this event— which Macron stated has mobilized investments worth €23 billion ($27.01 billion) in Africa—to develop new partnerships on the continent following a decline in its influence in its former West African colonies.
United Nations Secretary-General Antonio Guterres noted that borrowing costs in African countries are double those in advanced industrial economies. “This is not a market judgment on Africa, but a judgment on the injustices of the system,” he stated at the summit. African governments condemned what they described as biases against them that overestimate the continent’s risks and called for changes in the methodologies used by credit rating agencies.
Major rating agencies, including Standard & Poor’s, Moody’s, and Fitch, rejected accusations of regional bias, asserting that their ratings are based on established global criteria.
Macron’s proposal for a first-loss guarantee mechanism aims to enhance capital flows to Africa. This proposal is part of a broader effort to mobilize private capital for African countries, as wealthy governments reduce development funding in favor of defense and other domestic priorities.
While other G7 countries expressed support for making global financial institutions more responsive to Africa’s needs, the level of support for specific proposals remains unclear.
