Africa Spends More on Debt Servicing than Health Care, Secretary-General Tells High-level Policy Dialogue, Urging Financing, Investment in Continent
Following are UN Secretary-General António Guterres’ remarks for the Africa Dialogue Series’ High-level Policy Dialogue titled “Market and Scale: Unlocking Industrialization through Intra-Africa Trade”, in New York today:
I’m pleased to participate in the High-level Policy Dialogue of the 2023 Africa Dialogue Series. I commend your focus on industrialization and trade at a time when the continent is facing multiple crises — but crises not of its own making.
Africa is a place of great natural, human, cultural and entrepreneurial richness. On each of my many visits, I see the hope, energy and limitless potential of African people.
But a series of historic and economic barriers are preventing the continent from assuming its rightful place on the global stage. The robust growth that many African countries experienced before COVID-19 was lost to the pandemic. High food and energy prices, made worse by the Russian invasion of Ukraine, have strained both national and household budgets — exacerbating poverty, inequalities, and food insecurity. Rising interest rates are increasing the risk of debt distress.
Meanwhile, climate chaos is creating deadly floods and droughts and contributing to the risk of hunger. And too often, the most vulnerable populations suffer the most devastating consequences.
Guided by the 2030 Agenda for Sustainable Development and the African Union’s Agenda 2063, we must ramp up our efforts and harness the full potential of trade and industrialization to advance sustainable, inclusive growth.
The African Continental Free Trade Area is set to be an engine of that growth. Its full implementation could generate income gains of up to 9 per cent by 2035, according to latest estimates. This would lift up to 50 million people out of extreme poverty and reduce income inequalities.
However, realizing the promise of the African Continental Free Trade Area requires collective action across four critical areas: First and foremost — boosting access to financial resources and investment. When we look at the magnitude of development challenges, international support has fallen far short. The global financial system is structurally unfair to developing countries in general and African countries in particular. One example: Africa currently spends more on debt service costs than on health care.
Meanwhile, of the $650 billion of special drawing rights (SDRs) allocated by the International Monetary Fund (IMF) in 2021, Africa received only $34 billion — barely 5 per cent. At the same time, European Union countries like mine received $160 billion with less than half a billion population.
We need a fundamental reform of the global financial system so that Africa is represented at the highest level. Unused SDRs must be urgently reallocated to developing countries, namely through the multilateral development banks, with a multiplying effect. National Governments must act to create sound enabling environments and regulatory frameworks that boost public-private investment.
At the same time, the international community must support African countries in addressing their financing needs in the medium and long-term. I have called for an SDG stimulus to increase liquidity for developing countries and enable them to invest at scale in all the systems their people require — from health, education and social protection to public infrastructures and the transition to renewable energy.
Multilateral development banks must transform their business models and leverage their funds to attract more massive private finance into developing countries at reasonable cost.
Second, we need to energize intra-African trade and production capacities by breaking down the internal barriers holding it back: Eliminating tariffs. Building “made in Africa” supply and value chains. Boosting production capacities across African borders. Harmonizing regulations, policies and procedures — enabling African countries to invest across borders.
Third, energy and digital infrastructure. These are vital for African countries to build their manufacturing capacities and harness the full potential of innovation and entrepreneurship. We need to power Africa’s industrialization and leverage technology to leapfrog outdated infrastructure and head straight towards the fourth Industrial Revolution.
Africa has great resources to become a renewable energies leader. For example, Sub-Saharan Africa’s renewable power capacity — led by solar, onshore wind and hydro power — is expected to double by 2027. This provides great potential to increase countries’ resilience to the external shocks caused by volatility of imported fossil fuels prices.
The transition to clean energy could create more than 6 million jobs across the continent by 2050. And yet, the continent has received just 2 per cent of global investment in renewables over the past decade.
We must scale-up financial and technological support for African countries to secure affordable and clean energy access for all by 2030 and to achieve net-zero emissions by 2050. That requires doubling energy investments this decade by mobilizing domestic resources and foreign investments to bridge the gap to guarantee that electricity gets to all African households.
Finally, we must invest in human capital. We need a people-centred approach to development. The continent’s vibrant, young and innovative population represents a dynamic workforce — as well as a massive market. Creating decent jobs, particularly for women, and promoting education, training and lifelong learning is the best way to ensure Africa’s people fully contribute to the continent’s digital revolution and sustainable growth.
Africa is a land of enormous potential and resources — and already represents an essential part of global business. It includes some of the world’s fastest-growing economies. And the continent has much more to offer.
The African Continental Free Trade Area is poised to become the largest free trade zone on earth — further accelerating investment and trade opportunities, contributing to building resilience and reducing vulnerabilities to external shocks. And we know that inclusive, equitable, sustainable development represents a fertile ground for peace and the most effective conflict prevention tool.
The United Nations is committed to strengthening its partnership with Africa and supporting every effort to realize the promise of the 2030 Agenda and Agenda 2063. Let us work together toward the Africa we want — the Africa the world needs; the Africa that Africans merit.d