World Bank and IMF annual meeting due to take place in Marrakech, Morocco mid-October

* Ironically being held in a city and country still reeling from a devastating earthquake early last month of September

* Hosting these meetings on the African continent for the first time in half a century under such circumstances carries immense symbolism, serving as a demonstration of resilience

By Duncan Mlanjira

The annual meetings of the World Bank and International Monetary Fund (IMF) are due to take place in Marrakech, Morocco mid-October and ironically being held in a city and country still reeling from a devastating earthquake early last month of September.

Writing on The Conversation — a publication funded by the National Research Foundation of eight African universities — Carlos Lopes (Professor at the Nelson Mandela School of Public Governance, University of Cape Town) said “hosting these meetings on the African continent for the first time in half a century under such circumstances carries immense symbolism, serving as a demonstration of resilience”.

“The two institutions are increasingly facing questions about their relevance in addressing current global challenges,” he writes. “One of their responses has been to commit to playing a more prominent role in the global climate response.

“The call for reform of the IMF and World Bank is particularly urgent for Africa, where countries require increased access to public and private financing and debt relief.

“A transformed financial system is essential to support sustained growth that benefits everyone, and that bolsters climate resilience.

“Unfortunately, many sources of finance, including those from the World Bank and IMF, don’t adequately cater for African nations’ specific needs.

“To be effective, financial support for Africa must have several qualities: affordability, dependability, adequacy and sensitivity to the continent’s climate vulnerability.

“It must also be adaptable to address the persistent debt crises and liquidity challenges facing numerous African countries.

“Several policy proposals have been put forward, some from African countries themselves. Some are set out in a recent report which I was involved with by the African Climate Foundation on reforming the global financial architecture.”

Prof. Lopes’ observations resonates well with what President Lazarus Chakwera said in his address at the 78th United Nations General Assembly in New York last month where he called on developed countries and global money lending international institutions to consider cancelling debts owed by struggling economies.

He emphasized that most least developed countries (LDCs) like Malawi are distressed with the burden of never-ending repaying of debts which has seen their economies failing to catch up with those of the developed countries.

He thus said the idea of ending poverty by the year 2030 — as advocated in the Sustainable Development Goals — “would become another lip-service if the developing countries are not written off”.

“We need decisions and actions on debt, for like most LDCs, Malawi is in distress because its debt is unsustainable and so our call on behalf of all LDCs on this matter remains the same — cancel the debt.”

Chakwera reminded world leaders that the UN family has made minimal progress in past years in terms of economic growth due to, among other things, the CoVID-19 pandemic, natural disasters and the war in Ukraine — emphasizing that this was more reason the developing  countries must be relieved off their debt burden.

“In less than 30 years, we will come to the half-way point of this century, and in less than 80 years, the 21st century will end. By that time, none of us will be Presidents and none of us will be alive.

“So when we stand at this podium and speak of the future, we speak of a future that does not belong to us. When we speak of a future with sustainable development, we speak of a better world not for us, but for our grandchildren and their children.

“And the decisions we make today, the actions we take each day, are what determine what kind of future we are creating for them. It is, therefore, not good enough to say that we must rebuild trust in the world, when we continue making decisions that undermine trust.

“It is not good enough to say that we want to reignite global solidarity, when we continue to pick and choose whom we show solidarity with. It is not good enough to say we want to move towards peace, when our actions in other nations promote war and create the conditions for conflict.

“It is not good enough to say we want prosperity for all, when our rules for trade and our financial systems are a recipe for deepening the poverty of other nations.

“Without changing our decisions, our positions, and our actions, the future we speak of today and the sustainable development we dream of achieving by 2030 will remain a reality only on paper.

“And when it comes to urgent action, we must focus our attention, our energies, and our resources on the areas where we are falling behind. We must prioritize those places in the world that are most at risk of not achieving sustainability in any of the seventeen SDGs,” Chakwera said in his moving speech.

In his piece in The Conversation, Prof. Lopes says the African Consultative Group and the African Caucus within the IMF and World Bank “are voicing significant expectations about the outcomes from Marrakech.

“This reflects cautious optimism among Africans, grown weary of unfulfilled promises over the years. The decisions made in Marrakech will be a litmus test of the willingness of the IMF and World Bank to reform.”

Lopes stressed that the African continent “boasts promising opportunities for clean energy and is rich in mineral resources essential for the ecological transition — yet funding often bypasses it, or focuses on exports rather than local economic transformation”.

“Imposing a uniform policy approach on African countries has only worsened crises, limiting their policy space. For instance, Africa is meant to go through lengthy and strict processes to justify why it needs resources to support certain green projects.

“This adherence to specific orthodox macroeconomic principles is less strict when applied to wealthier countries. But it’s inflexible for vulnerable African countries.

The African Climate Foundation’s recent report identified numerous flaws in funding, as well as the reasons why Africa suffers more than most to access liquidity. We found that:

* Much of the financing is directed towards mitigation efforts, such as increasing area of forests. There’s little attention to adaptation, which is a priority for the continent. Mitigation tends to be more profitable for financiers and lenders.

* Rating agencies’ behaviour has elevated interest rates for African countries. This has forced most countries to substantiate their funding needs beyond reason, despite having the lowest default rates on infrastructure project debt worldwide.

* Flows are being hindered by restrictive terms, commercialisation of climate finance, high interest rates, unmet climate finance commitments, unethical and speculative carbon markets, declining overseas development assistance and labelling of the same money as “climate finance”.