Africa: Global Leaders Commend AfDB’s Contribution to New Financing Pact

Global leaders participating in the Paris Summit for a new global financing pact have expressed appreciation for the African Development Bank (AfDB) in its efforts to enhance the Special Drawing Rights (SDRs) of low-income countries.

The leaders believe that this solution will enable wealthier nations to reallocate a portion of their SDRs to low-income countries through multilateral development banks, while preserving the asset reserve status of the SDRs. They anticipate that this approach will unlock significant financial resources, amounting to billions of dollars, for Africa.

A statement from the AfDB highlighted that the bank, alongside the Inter-American Development Bank, has been leading the call for the reallocation of SDRs through multilateral development banks to address the impacts of climate change and other global challenges, ultimately supporting livelihood restoration.

During the pre-summit forum’s opening, United Nations Secretary-General António Guterres applauded the African Development Bank’s initiative to channel SDRs to multilateral development banks, emphasizing the potential five-fold increase in their impact. Guterres urged countries to assign a price to carbon, end fossil fuel subsidies, and redirect such funding toward sustainable and productive endeavors.

French President Emmanuel Macron, who convened the summit, outlined four key pillars for the new global financial pact. He stressed that the pact must prioritize the support of those most affected by climate change, ensure that countries can address poverty and environmental protection simultaneously, promote diverse approaches tailored to each country’s specific context, tackle public funding challenges, and mobilize significant resources from the private sector.

During the summit, United States Treasury Secretary Janet Yellen acknowledged the significance of regional development banks in addressing development finance challenges and reducing vulnerabilities in developing countries. Yellen highlighted the African Development Bank, Asian Development Bank, and Islamic Development Bank as institutions fostering important innovations.

Yellen emphasized the need for continued collaboration between the World Bank and regional development banks while also calling for reforms within the global bank. In response, World Bank President Ajay Banga recognized the role of regional development banks and pledged closer partnership with the African Development Bank, citing his early engagement with AfDB President Akinwumi Adesina during his tenure.

The global leaders’ recognition of the African Development Bank’s efforts underscores the importance of multilateral collaboration and the need for financial resources to address climate change and promote sustainable development in low-income countries.