During her participation in the 2024 Annual Meetings of the World Bank Group: H.E. Dr. Rania A. Al-Mashat presents African countries’ needs to reform the global financial architecture and strengthen the role of the World Bank in supporting development and integration on the continent

 Al-Mashat: The global financial system does not adequately respond to the challenges and aspirations of the African continent
 

 The need to formulate comprehensive and sustainable solutions to the debt crisis and increase the representation of the continent’s countries in international institutions.
 

 Al-Mashat calls on the World Bank to play a greater role in supporting cross-border payment systems and services to support intra-trade on the continent.

 Enhancing the continent’s countries’ benefit from IFC and MIGA tools to reduce investment risks, bridge development gaps and encourage the private sector.

 
Africa has significant opportunities to expand into carbon markets and participate effectively in supporting the global climate agenda.

 

H.E. Dr. Rania A. Al-Mashat, Minister of Planning, Economic Development and International Cooperation and Governor of Egypt at the World Bank, participated in high-level events within the World Bank Group Annual Meetings for 2024 in Washington, DC, on Africa’s agenda and priorities for reforming the global financial architecture, as well as the African Caucus meeting with the President of the World Bank Group, and expanding African carbon markets.

 

African High-Level Working Group on the Global Financial Architecture

 

Dr. Rania Al-Mashat spoke at the African High-Level Working Group meeting on the Global Financial Architecture, organized by the United Nations Economic Commission for Africa (UNECA), with the participation of African Ministers of Planning and Economic Development, as well as Ministers of Finance, representatives of the African Union (AU), the African Development Bank (AFDP), the African Export-Import Bank (Afreximbank), the World Bank Group (WBG), and the International Monetary Fund (IMF).

 

The Minister of Planning, Economic Development and International Cooperation affirmed the importance of the international community taking effective steps towards restructuring the global financial system, in a way that makes development financing more just and equitable, adding that the African continent has a unique opportunity to accelerate its transformation into a single market, to become a key player in global value chains and a major destination for investment, especially with the growing attention in the green transformation. However, this progress is hampered by a global financial system that was established in a different era and does not adequately address the needs of African countries or take advantage of the opportunities offered by the continent in terms of its abundant natural and human resources, noting that it is time to create a global financial structure that would better serves Africa.

 

H.E. explained that over the past few years, African leaders have made increasingly clear demands for systemic change, supported by African institutions and organizations that have identified several achievable priorities in the short to medium term; which include formulating a comprehensive solution to the debt crisis, increasing grants and concessional funding for Africa, committing to an ambitious green growth agenda for Africa, ensuring the redirection of Special Drawing Rights (SDRs) to African financial institutions, and increasing Africa’s voice and strength in global decisions and decision-making entities.

 

Al-Mashat pointed out to international reports that address the high debt burdens on the continent’s countries, which underscored the need to reform the existing credit rating system through the establishment of a regional credit rating agency that contributes to provide more accurate assessments that reflect regional economic conditions, social dynamics, and political factors specific to Africa.

 

The Minister also discussed the importance of debt restructuring for middle and low income countries and using the debt swap mechanism for development as an innovative financing tool, as well as adopting economic development policies that support growth, employment and increased productivity, while providing a favorable investment environment to attract international and domestic private capital, and multilateral cooperation to implement the European Union’s Carbon Border Adjustment Mechanism (CBAM) efficiently and effectively, especially in developing countries.

 

African Caucus Meeting with World Bank Group President

 

In a related context, the Minister of Planning, Economic Development and International Cooperation participated in the meeting of the African Group Governors with the President of the World Bank Group, Mr. Ajay Banga, where the meeting discussed 5 important pillars: strengthening the payment system across the African continent, accelerating the energy access and energy connectivity on the continent, strengthening partnerships with multilateral development banks, reforming the global financial architecture, and the 21 replenishment of the resources of the International Development Association (IDA).

 

Al-Mashat delivered a speech confirming the need to make the most of existing and new partnerships with multilateral development banks, while improving performance as a single entity of the World Bank Group. Following up that although collaboration with partners is a fundamental aspect of the World Bank’s operations, there is an opportunity to enhance the effectiveness of that cooperation by better integrating efforts with other development banks, and providing greater internal and external incentives to strengthen partnerships.

 

The Minister continued that through these efforts, the World Bank Group could enhance innovation, expand funding, and increase impact through knowledge sharing and technical support. H.E. also commended the Bank’s development of the knowledge compact for action in May 2024, expressing her aspiration to implement its core areas.

 

Al-Mashat explained that African countries have not yet reached their commercial potential, which makes the role of multilateral development banks more important, stressing that the competitive advantages of these banks, their financial resources, and their extensive networks can support the development of strong market platforms, cross-border services, and inclusive payment systems that contribute to enhancing intra-African continent trade and promoting regional integration.

 

Al-Mashat called on the World Bank Group to cooperate with the African Union to enhance financial inclusion on the continent and improve the integration of payment systems within the continent, which would contribute to the achievement of the desired goals. H.E. also called on the World Bank Group to enhance cooperation with multilateral financial institutions on the continent and research centers to address cyber threats, develop local expertise in managing payment systems and value chains, and support start-up incubators in the field of financial technology to strengthen the payment system in Africa.

 

Noting the vital role that the private sector will play as African countries seek to achieve more trade opportunities, explaining that small and medium-sized enterprises (SMEs) in Africa face two main challenges, namely the difficulty of obtaining financing and affordable capital, stressing the need to bridge the trade finance gap in Africa to facilitate trade integration and develop industrial value chains; in addition to the need to expand local currency financing solutions and develop local capital markets.

 

The Minister further affirmed the need to encourage the World Bank Group, especially the International Finance Corporation (IFC) and the Investment Guarantee Agency (MIGA), to continue to innovate and mobilize support for blended funding approaches, provide guarantees, and create new financial platforms and instruments accompanied by advisory services to reduce investment risks and bridge gaps in Africa, while providing adequate concessional funding to all countries.

 

In conclusion, H.E. highlighted the World Bank Group’s increased collaboration with multilateral development banks to identify and advance co-financing opportunities, such as those offered by the Global Co-financing Platform, while continuing to align policies and procedures with multilateral development banks to reduce the burden on client countries.

 

Expanding Carbon Markets in Africa

 

In a related context, the Minister spoke at a high-level event entitled “Regulating Emerging Carbon Markets in Africa: Challenges and Opportunities”, organized by the Egyptian Financial Supervisory Authority, the Glasgow Financial Alliance for Net Zero (GFANZ), and the Africa Carbon Markets Initiative, with the participation of Dr. Mahmoud Mohieldin, Special Envoy of the United Nations Secretary-General on Financing the Sustainable Development Plan, Dr. Mohamed Farid, Chairman of the Financial Regulatory Authority (FRA), and Mr. Jean-Paul Servais, Chairman of the International Organization of Securities Commissions (IOSCO).

 

Al-Mashat also emphasized that the African continent suffers in particular from the effects of climate change and is exposed to severe climate fluctuations, which impedes economic and social development efforts on the continent, adding that carbon markets are an effective means of reducing harmful gas emissions because they enhance economic growth and social progress. These markets also allow for the creation of a system that links environmental protection and economic development, through the exploitation of investments in renewable energy projects and other environmental initiatives that contribute to the achievement of sustainable development goals. For African countries, these markets represent an opportunity to exploit our abundant natural resources in a responsible manner.

 

H.E. also pointed out the importance of exploring opportunities for carbon markets in Africa and addressing the challenges they face directly, and expanding voluntary carbon markets, especially since Africa has the potential and resources to be at the forefront of these efforts, thanks to its wealth of natural resources and its ability to innovate. Therefore, we have the ability to create reliable and effective carbon credits, in line with global best practices, which enhances the credibility of our markets, stressing that progress in this area will help enhance transparency and efficiency, and will enhance the capabilities of African countries to address climate challenges, as it highlights Africa's growing role in leadership in global climate discussions.

 

Moreover, the Minster highlighted Egypt's experience in this field, as the FRA launched Egypt's first regulated voluntary carbon market in cooperation with the World Bank, which is an important step towards achieving our ambitions to build a green economy.

 

The Minister concluded her speech by emphasizing that despite the challenges that might face carbon markets in Africa, the opportunities available are enormous and multiple, affirming that Africa needs to participate effectively in global discussions on climate, and to ensure that its vision is present in all talks.