The African Caucus Is Seeking $120 Billion In Ida Financing To Address Various Challenges, Including Food Security, Energy, Climate Change, And Other Pressing Issues.

Bagudu: Development Support for African Countries Insufficient, Says Finance Minister

James Emejo in Abuja

The African Caucus Meeting of Finance Ministers and Central Bank Governors has echoed the call made by Heads of State for donor countries within the International Development Association (IDA) to increase their support for borrowing member countries to reach $120 billion. The aim of this financial package is to tackle persistent and emerging challenges including climate change, food insecurity, energy deficit, and fragility.

The most recent replenishment of IDA’s resources, referred to as IDA20, was finalized in December 2021. This resulted in a historic financing package of $93 billion for IDA countries for the fiscal years 2022-2025, making it the largest mobilization of funds in IDA’s 61-year history. IDA, a part of the World Bank, provides grants and low-interest loans to low-income countries, enabling them to invest in their future, enhance their living standards, and create safer and more prosperous communities.

Minister of Budget and Economic Planning, Senator Abubakar Bagudu, expressed his concerns during a panel session on IDA interventions. He stated, “We are not, as a continent, growing as fast as we should, and we are not being supported as much as we think we should have. While it is possible for a country with 10 million people in Europe to find $200 billion, Nigeria with over 200 billion people can hardly find $10 billion.”

The call by the African Caucus Meeting for increased support from donor countries was one of the key outcomes of its 2024 meeting held in Abuja. The meeting also acknowledged the importance of intra-African trade in unlocking production, investments, and job opportunities within Africa. It was noted that African countries continue to trade more with the rest of the world than among themselves. Addressing both tariff and non-tariff barriers to intra-African trade, such as fragmented payment ecosystems, poor energy access, lack of infrastructure, inconsistent regulatory frameworks, and divergent cross-border procedures, was seen as crucial for boosting Africa’s share of global trade and stimulating sustainable and inclusive growth.

The theme of the meeting, “Facilitating Intra-African Trade: Catalyst for Sustainable Economic Growth in Africa,” emphasized that trade can drive economic growth by creating opportunities for increased production, investment, and job creation. It highlighted that trade provides access to larger markets, new technologies, and capital. The African Continental Free Trade Area (AfCFTA) was recognized as an initiative that aims to promote trade among African countries by reducing trade barriers, harmonizing regulations, and facilitating the movement of goods and services across the continent.

The Governors identified four key pathways to boosting intra-African trade, which include strengthening the pan-African payment ecosystem, enhancing energy access, affordability, and connectivity, leveraging partnerships with Multilateral Development Banks (MDBs), and reforming the global financial architecture. The caucus also emphasized the importance of the International Monetary Fund (IMF) and the World Bank Group (WBG) aligning their support to member countries with the principles of balance and evenhandedness, especially during times of adverse exogenous shocks and significant financing needs.

The African Caucus Meeting took place against the backdrop of a synchronized global economic slowdown, characterized by a deceleration in global GDP growth due to monetary tightening in developing countries and disruptions in global supply chains. Geopolitical tensions, including the Ukraine and Palestinian crises, further exacerbated these challenges. Despite Africa’s resilience, as reflected in its GDP growth rates, intra-African trade remains relatively low, accounting for only about 14.4% of total African exports.

A memorandum summarizing the outcomes of the 2024 African Caucus Meeting will be delivered to the Heads of the Bretton Woods Institutions (BWIs) during the Annual Meetings of the IMF and the WBG in October 2024, in Washington, USA. The memorandum will present the deliberations and recommendations of the African Caucus.