There is a growing consensus, and not just in the Global South, that the current global financial system is no longer fit for purpose.
Africa in particular faces weighty consequences because of the inadequacies of the global financial architecture, with many countries being unable to shake off the label of bearing a “high risk premium” despite years of heady economic growth. This imposes on them higher costs when they borrow, setting many nations on the continent on a path to economic crisis amid the biggest surge in global interest rates in four decades.
Against this backdrop, 19 of Africa’s 35 low-income countries are in debt distress or facing a high risk of debt distress, according to the International Monetary Fund (IMF). Rising debt service costs in Africa have stifled investments in health, education and infrastructure.
Overhauling the global financial architecture
This intolerable state of affairs has fuelled widespread calls among African leaders for an overhaul of the global financial architecture. There have been several hard-won victories for Africa in this campaign, which has won supporters in both the Global South and advanced economies around the world.
The global taxation system, for example, is on the path to a more equitable future after a vote on an Africa-backed resolution at the UN in November last year paved the way to shift control of international tax rules from the Organisation for Economic Cooperation and Development (OECD) – comprised of 38 richer countries – to the UN, where the 193 member states are on a more equal footing. Similarly, the recent inclusion of the African Union (AU) in the G20 and the addition of an extra seat for sub-Saharan Africa at the IMF are of major