H.E. Kashim Shettima, Vice President of the Federal Republic of Nigeria,
H.E. Dr. Edouard Ngirente, Prime Minister of Rwanda,
H.E. Wale Edun, Minister of Finance of the Federal Republic of Nigeria and Chair of the African Caucus,
H.E. Amb Albert Muchanga, AU Commissioner for Economic Development,
H.E. Patrick Achi, Former Prime Minister of Cote d’Ivoire,
H.E. Lord Boateng, Member of the House of Lords, UK
Excellencies,
Ladies and Gentlemen,
Let me start off by deeply appreciating the Chair of the Caucus, H.E. Wale Edun’s leadership and the importance of this timely meeting leveraging on African trade central to agenda 2063, but also for financing for development and the means of implementation.
Boosting trade between our nations has long been an aspiration for our region and the AfCFTA roadmap.
The past four years of global economic crisis have underscored the importance of this task today.
Multiple shocks have left economies scarred, facing meager growth prospects, and in desperate need of economic development to rescue the Sustainable Development Goals and Agenda 2063.
The COVID pandemic and the war in Ukraine and regional conflicts have exposed the vulnerability of global supply chains, including those for essential goods such as food and medical supplies. Policymakers must now contend with how to strengthen their economies’ resilience.
Meanwhile, the multilateral response to global shocks has been both inadequate and highly unequal. That has prompted calls across Africa for our countries to work together. To draw on our collective strength, rather than rely on distant partners whose commitments are not always honoured – particularly in times of crisis.
These imperatives – accelerated development, stronger resilience, and deeper regional cooperation – make the case for deepening intra-African trade compelling and urgent.
Over the next two days, we will have the chance to discuss many strategies for supporting intra-African trade.
One is trade facilitation.
An estimated $9 billion in additional trade can be unlocked through liberalizing trade on the continent – as envisaged under the African Continental Free Trade Area. Yet we could unlock at least five times that volume by addressing other non-tariff frictions: streamlining and digitizing border procedures, harmonizing regulations; and investing in transport corridors.
Nigeria’s recent launch of the Guided Trade Initiative under the African Continental Free Trade Area demonstrates this country’s commitment to the strategy.
A second strategy to support regional trade is by nurturing a Pan-African payment ecosystem.
This requires a holistic approach, involving multiple systems and stakeholders.
The Pan-African Payment and Settlement System is one such example:
Conceived by Afreximbank – working in partnership with Central Banks and private banks – it provides a foundation to facilitate significantly greater volumes in cross-border payments across the continent.
A third strategy is bolstering access to energy and connectivity.
Installed electricity capacity in Africa needs to be increased at least five-fold - and most of this increase can come from the continent’s abundant clean energy resources.
To realize this goal, African countries must put in place bankable just energy transition plans. When matched with investors, such efforts can not only facilitate trade, but power broader economic transitions that accelerate development and deliver across the SDGs.
I would like to commend African leaders for working together to pursue these strategies, which have the potential to turn the promise of intra-African trade into a reality.
But we must also recognize the formidable challenges facing African Ministers of Finance as they pursue these and other goals.
Progress on trade facilitation, payment infrastructure, and energy, all hinge on public investment. Yet today, developing countries face scant fiscal space. The global funding gap for SDG investments is a staggering $4 trillion a year.
The international financial architecture – which is intended to drive international capital to where it is needed – has proven unable to fill this gap. In fact, the funding gap is growing bigger over time.
The World Bank, alongside other multilateral development banks, can play a critical role in making investments more affordable, by providing low-cost, long-term funding, and de-risking private investments.
The recent joint commitment by the World Bank and African Development Bank working with Sustainable Energy for All to connect 300 million Africans to electricity before 2030 provides a powerful example of this.
But to plug the financing gap, we need these Banks to be three times their current size.
To their credit, the multilateral development banks, led by the World Bank, have embarked on a bold reform agenda. This includes stretching their balance sheets to enable greater volumes of lending.
Such efforts are welcome. But, ultimately, the MDBs will require general capital increases if they’re to reach their required size, as recommended by the G20 independent expert group.
We also desperately need action on debt.
Today, public investment opportunities must not only compete with each other. They must compete with debt service too. Last year, an extraordinary 48 percent of government revenue in sub-Saharan Africa alone was devoted to meeting debt payments.
It is painfully obvious that such levels of debt service are unsustainable.
And that, without action, any increase in MDB lending will not yield development dividends, but simply be diverted to hungry creditors.
Resolving today’s debt crisis requires mobilizing systematic support for countries where debt overhang is stifling SDG spending. At the same time, we must build a new architecture that enables countries to borrow with confidence and invest in the future of their nations.
Finally, we must strengthen revenue generation. Boosting public investment depends on it.
That requires action from governments. Let’s be clear: the promises our countries have made to mobilize domestic resources have not been met. They must be reinvigorated.
But in today’s globalized economy, domestic resource mobilization cannot occur in a vacuum – international cooperation is critical for effective taxation.
African leadership has made the case that tax cooperation requires approaches that work for all countries, and in which all countries have a voice.
We now have the promise of a Framework Convention at the United Nations, to shape and strengthen future cooperation.
African leadership was critical in initiating this process.
And it remains critical today – in guiding negotiations to an outcome that can win the backing of the global community.
Excellencies,
African Ministers of Finance have played a vital role in placing these issues on the global agenda. I urge all of us to collaborate in delivering change – particularly over the next 18 months – at the Summit of the Future in September, the Annual and Spring meetings, the G20, COP29, and next year’s Fourth International Conference on Financing for Development.
This agenda is too important to ignore. The protests witnessed in this country and in others are a response to a persistent cost of living crisis that is rooted in the global economic turmoil of this era. The importance of our African economics must take center stage. It’s time to tackle those root causes head-on.
Africa has a unique opportunity to drive change, and by doing so to progress towards a vibrant and sustainable future. One determined by the African narrative.
So, as we work together to boost intra-African trade, let’s also challenge the current international financial that is not fit for purpose, and demand it responds to the needs, rights and aspirations of the African continent and its people especially youth and women.
I look forward to caucusing towards a new era of prosperity.
Thank you.