writes Joseph Atta-Mensah.
Africa-Press – Ghana. As the weather warms and the days get longer, leaders met for the IMF and World Bank Spring Meetings. It is time for Africa to speak with clarity and conviction—not as a bystander, but as a strategic force.
Africa is growing but not transforming. Africa’s GDP growth ticked up from 3.0 per cent in 2023 to 3.2 per cent in 2024, with a projected rise to 4.1 per cent in 2025. But behind these numbers lies concern. Much of the expansion remains cyclical and externally driven, powered by commodity demand, favourable weather, or short-term public investment surges. The continent relies on a narrow range of exports like oil, gold, and agricultural goods that leaves economies highly exposed to global shocks and climate risks.
Structural change has lagged. More than half of Africa’s workforce is still engaged in low-productivity agriculture or informal urban employment, with limited access to social protection, credit, or career mobility. Recent growth figures masks persistent weaknesses in diversification and productivity. Without strong domestic value chains and investment in innovation, the continent risks repeating cycles of shallow growth and missed opportunity.
Africa’s challenge is not just to grow, but to transform. This means moving beyond extraction to inclusive industrialisation, embracing technology and innovation to leapfrog infrastructure gaps, and fully activating the AfCFTA to build integrated regional value chains. It also requires macroeconomic policies aligned with investment in people, institutions, and productivity. Only then can growth become a foundation for enduring prosperity—not just a fleeting blip on a chart. To do so, Africa needs to make the international financial infrastructure work in its favour.
The debt dilemma is a symptom, not the disease
Africa’s external debt rose to $1.15 trillion by the end of 2023, up from $1.12 trillion in 2022, highlighting the continent’s persistent reliance on external financing. Servicing this debt is increasingly difficult. In countries like Ghana, Nigeria, Malawi, and Angola, more than 25 per cent of government revenue goes to interest payments. This crowds out essential investments in education, health, and infrastructure.
A major obstacle is the high cost of borrowing. African sovereign bonds often carry yields 5–8 percentage points above those of countries with similar economic fundamentals. This “Africa premium” is driven less by data than by risk perceptions, credit rating biases, and limited trust in Africa’s debt resolution frameworks. The result: a debt trap where countries borrow at high rates just to stay afloat.
To break this cycle, Africa needs a new global financial architecture—one that reduces dependence on expensive commercial debt and expands access to concessional finance. Innovative instruments like debt-for-climate or debt-for-investment swaps can tie sustainability to solvency.
Ghana and Zambia offer cautionary tales. Ghana’s debt suspension in 2022 triggered protracted negotiations under the G20 Common Framework. Zambia, despite being a pilot case, experienced lengthy delays that undermined investor confidence. These cases show the need for faster, more equitable restructuring processes.
The IMF’s Global Sovereign Debt Roundtable, launched in 2023, holds promise. It brings together creditors and debtors to promote coordination and transparency. But to work for Africa, the Roundtable must go further and ensure African voices carry weight, that restructuring supports development, and that accountability is mutual.
Finally, reform must start at home. Many African governments lack full visibility of their debt obligations, particularly from state-owned enterprises and contingent liabilities. Strengthening debt transparency and public financial management is key to restoring trust and securing better terms.
Inflation, industrialisation, and the way forward
Inflation across Africa averaged 18.6 per cent in 2024, with countries like Nigeria, Ethiopia, and Zimbabwe seeing rates exceed 30 per cent. This surge was driven by global shocks—geopolitical tensions, rising energy prices, and food import costs linked to climate disruptions. Currency depreciation further intensified imported inflation in countries dependent on external goods. While central banks have tightened monetary policy, rate hikes alone won’t suffice. What’s needed is a broader strategy: investing in agriculture, renewables, regional trade, and domestic supply chains to build resilience.
At the same time, industrialisation remains Africa’s most underutilised engine for transformation. The continent accounts for less than 2 per cent of global manufacturing output, despite abundant resources and a growing workforce. The AfCFTA offers a pathway to change by creating a continental market. But trade liberalisation must be matched with real investment in infrastructure, energy, industrial hubs, and workforce skills. Without coordinated policies to build competitive ecosystems, Africa risks staying locked in raw commodity exports, missing the chance to move up the value chain.
Domestic resource mobilisation and climate finance
Africa collects just 14.8 per cent of its GDP in tax revenue—less than half the average in advanced economies. Boosting tax administration is critical, but taxation alone won’t close the financing gap. Domestic resource mobilisation requires a broader strategy: expanding the tax base, curbing legal loopholes that enable profit shifting, and eliminating wasteful incentives. Strengthening revenue authorities, enhancing governance, and digitising systems will help improve compliance and efficiency.
Illicit financial flows cost Africa an estimated £66 billion a year. These losses—through trade mis-invoicing, corruption, and regulatory gaps—deprive the continent of vital resources. Tackling this demands transparency, stronger regional cooperation, and alignment with global frameworks like the OECD’s Base Erosion and Profit Shifting initiative, which is a collaborative project between the OECD and the G20 aimed at preventing tax avoidance by multinational enterprises.
To secure long-term finance, Africa must also deepen its capital markets. Building local currency bond markets, issuing green and infrastructure bonds, and engaging institutional investors are all key steps. Sovereign wealth funds, diaspora bonds, and public-private partnerships can diversify the financing mix.
Mobile tech and fintech can broaden access to finance and mobilise savings. Cross-border capital market initiatives—like the African Exchanges Linkage Project, is a collaborative initiative between the African Securities Exchanges Association and the African Development Bank aimed at facilitating cross-border trading and investment within African capital markets. This has the potential to make capital markets more vibrant, improve liquidity and unlock investment across the continent.
Climate change adds further urgency. Over 110 million Africans were affected by climate disasters in 2023, with damages exceeding £6 billion. Yet Africa receives just 3–5 per cent of global climate finance. Scaling up support—especially for adaptation—is essential.
Access to climate finance must be simpler, faster, and country-led. Instruments like blended finance, risk guarantees, and debt-for-climate swaps can align climate goals with fiscal needs. Above all, climate funding should reinforce—not replace—Africa’s development investments in health, education, and resilience.
Africa’s message to the Spring Meetings
Africa’s message must be bold, clear, and unified. First, the global financial architecture must be reformed to reflect today’s realities. This means fairer representation and voting rights for Africa at the IMF and World Bank, along with meaningful African leadership in the institutions that shape global financial rules.
Second, climate finance must be delivered with urgency, equity, and simplicity. Existing pledges must be honoured, with funds disbursed swiftly and directly—especially to the most climate-vulnerable countries. Mechanisms must be redesigned to ensure easier, country-driven access, with a stronger focus on adaptation.
Third, debt restructuring frameworks must become more inclusive and development oriented. Africa needs timely, transparent processes that coordinate creditors and provide the fiscal space for countries to pursue growth and build resilience—rather than punishing them for past crises.
Fourth, Africa requires scaled-up investment in infrastructure, education, industrialisation, and innovation. These are not optional—they are foundational for productivity, job creation, and competitiveness. Young people and entrepreneurs must be empowered with the skills, tools, and opportunities to lead the continent’s transformation.
Finally, Africa calls for fairer global trade rules and real support for technology transfer. The international trade system must support, not stall, Africa’s climb up the value chain. Trade agreements must align with development goals and address structural inequities that keep African economies dependent on raw commodity exports.
Africa’s future hinges on the decisions made today—across its capitals and on the global stage. With bold leadership, the continent can transform its crossroads into a springboard for inclusive growth and shared prosperity. This means fully implementing the AfCFTA, advancing the SDGs, and investing in food security, health, and gender equity. Peace, democracy, and accountable governance must anchor the journey. The time to act is now.
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