Kagame: Global financial system reforms will benefit all, even the skeptics

By Wycliffe Nyamasege
On 30 May 2024 at 10:13

President Paul Kagame has called for a collaborative approach to redesign the global financial architecture, arguing that there is room for everyone to benefit, including those who are sceptical about the changes.

President Kagame said that some powerful entities have not been responsive to calls for reforming the existing financial systems due to fears of losing influence and control over the sector.

The Head of State spoke on Wednesday, May 29, during the presidential dialogue on the topic "Africa’s Transformation, the African Development Bank (AfDB), and the Reform of the Global Financial Architecture" at the AfDB annual meetings in Nairobi, Kenya.

He emphasized that it was a "no-brainer" that financial systems designed more than 50 years ago are no longer viable today.

"Things have changed, and therefore, a rethink of a new design that fits the purpose must be put into play. There is no doubt about that. I think everybody understands that point, but there are interests that operate behind it. For us in Africa, we are hard-pressed to see there is a change in the design of these institutions. But maybe the way the institutions are set up benefits some parts of the world. Those in those parts of the world are not interested, or they are being slow in allowing the change to happen because it gives them control and say over other people’s resources," President Kagame stated.

"Everybody understands [that reforms are necessary]. What is complicated is reaching this understanding and compromising that we don’t lose anything by having everybody benefit as we should benefit, all of us."

President Kagame also noted that for Africa to achieve the much-needed gains, the continent must be united and speak in one voice.

“Africa’s interests must be taken care of, beginning with ourselves...it has to be with one voice but also loud, clear, and effective. For that to happen, we think about working together,” he said.

“The reform we are talking about is how to disrupt the current architecture so that it includes significantly and visibly the interests of our continent.”

He said the rest of the world can not afford to ignore the African continent as it’s the only region that will have a growing middle-income class in a "few decades".

"In a few decades, the only place in this world that will have a growing middle class is Africa. So it is even in the interest of the rest of the world that has marginalized Africa to contribute to the wellbeing of our continent. Because the growth of Africa, based on this middle-class, feeds into the growth of the rest of the world," President Kagame said, adding "But Africa cannot wait to be handed this opportunity by anybody else, we therefore must be on the frontline, fighting for this right, for ourselves but also which contributes to the wellbeing of the rest of the world.”

The presidential dialogue was part of the five-day 59th Annual Meeting of the Board of Governors of the African Development Bank and the 50th Meeting of the Board of Governors of the African Development Fund taking place at the Kenyatta International Conference Center (KICC).

Kenya’s President William Ruto, who was among the panellists, also emphasized that the reforms were long overdue and should solve the continent’s most pressing issues including climate change.

"The issue of reforms is settled; it must be done. We need a financial architecture that has long-term financing, with 40 years or 10 years grace period, low-interest rates, concessional financing, including where possible grants. We also need financing at scale; the quantum is very important. We also need finance that is agile, flexible, and especially climate-sensitive. So, if there are shocks, that financial architecture must be responsive because climate change is the new normal," President Ruto explained.

"Switching from drought to floods progressively is becoming what it is. In Kenya, we had a drought a year ago that decimated 2.5 million herds of livestock. This year alone, we are on floods that have taken the lives of 200 Kenyans. So, this is the new reality. The financial architecture that must be in place must respond to this climate reality we have."

The Annual Meetings comprise Member States’ invitation-only sessions, closed bilateral meetings, as well as events open to all attendees, including the press. They provide a forum for Bank Group Governors to share their experiences with managing a mounting burden of public debt, which has surged following the global economic shocks of the last few years.

The meetings also offer a forum for the delegates to examine the African Development Bank’s contribution to Africa’s socio-economic transformation.

President Paul Kagame emphasized that it was a "no-brainer" that financial systems designed more than 50 years ago are no longer viable today.