“US Treasury Secretary Janet Yellen, declaring that Africa can help shape the future of the global economy, will set out why the Biden administration intends to elevate its focus on the continent over the next two years in a speech she’s slated to deliver Friday in Dakar, Senegal.”
“The United States is committed to building on Africa’s significant progress in economic development over the past few decades,” Yellen said in excerpts of the speech released by the Treasury. “Africa’s success will mean success for all of us, and the United States is here as a partner to help Africa realize its massive economic potential.”
Africa as Central to Reshaping Global Institutions
“Yellen, many of her African counterparts, and the African Union (AU) have been outspoken in calls for Multilateral development banks MDB reform, including to their priorities, financial models, operations, and governance structures. Indeed, Africa needs to be central to the debate on reshaping global institutions. Yellen’s travel will provide the opportunity to elevate consultation with African leaders, including Senegal President Macky Sall, who is also chair of the AU. At the summit, the administration pledged to “work to realize greater and long overdue African representation in international institutions,” including by supporting an African Union seat in the G20. Yellen should think even bigger and take action to ensure the international financial system better serves the African people, as their leaders have been demanding.
For one thing, this visit should be a springboard for closer strategizing on how to use the upcoming Spring meetings of the World Bank and the International Monetary Fund (IMF) to catalyze the ambitious action needed. As one example, the Treasury Department could concretely expand African economic leadership by backing a third chair for sub-Saharan Africa on the IMF’s Executive Board, an influential decision-making body with direct impact on the global economy and especially developing and emerging economies. Africa represents more than 15 percent of the world’s population (projected to increase to 25 percent by 2050), but the continent currently holds less than 5 percent of the voting shares on the IMF Board. The United States, by contrast, holds 16.5 percent of the vote with less than a third of that population. The additional chair for sub-Saharan Africa would provide a significant step towards broader reforms needed at the Fund, and is supported by the developing country-led “Group of 24.” However, backing from the United States is make-or-break since major decisions at the IMF require 85 percent support.
The Biden administration’s Africa strategy has rightly focused on the need to support democracy and good governance in Africa. But these goals are hampered by multiple crises, including the effects of strangling debt. Sovereign debt on the continent is a serious concern, with African countries representing the vast majority of those categorized by the IMF as already in debt distress or at high risk.
How to resolve unsustainable burdens of sovereign debt is a longstanding conundrum that took center stage with the 1990s “Jubilee” movement and is now again coming to the forefront. Post-pandemic, the situation has reached crisis levels, with inflation pushing up the cost of borrowing for poorer countries. The resulting government spending cuts to service that debt have been devastating, especially for women and girls, who bear the brunt of reduced public services and crumbling infrastructure.”
Credit: Bloomberg Christopher Condon, Kate Donald, Anne-Marea Griffin (Jist Security)
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