Tackling Africa's debt crisis top on agenda at G20 meeting

The ongoing G20 meeting in South Africa has brought Africa to the forefront, with the continent advocating for critical reforms to address the debt crisis. One of the key issues being highlighted is fixing the cost of capital, a move that could potentially enable African countries to access more affordable financing and usher in cheaper loans for the region's poorer nations. CNBC Africa recently spoke with Dauoda Sembene, Chief Executive Officer of Africatalyst, to delve deeper into the measures that countries can take to tackle the debt crisis. Sembene also shared insights from their recently released report focusing on innovative financing solutions for Africa's development. South Africa, as the current G20 presidency holder, has been driving efforts towards a debt framework. The importance of this initiative extends to global partners, including G20 countries, and supports African-led initiatives to address the debt problem. Sembene emphasized the critical need for mobilizing funding to assist countries facing challenges related to debt distress and liquidity issues. Through collaborative efforts, the global community can provide vital support for development and climate action in Africa. The conversation also highlighted the significance of smaller development banks in facilitating access to sustainable and affordable finance beyond the well-known multilateral development institutions. Sembene stressed the importance of empowering African-led organizations to mobilize funding and play a role in enhancing financial access for regional borrowers. Addressing the debt crisis within Africa has become a pressing issue, prompting tensions among countries on the continent. The release of a new UN report on the matter further underscores the urgency of finding effective solutions. Sembene pointed out the significance of innovative funding mechanisms, with a specific focus on Sub-Regional Development Banks (SRDBs). These banks rely on shareholder capital, interest income, and global market access for funding, but there is a need for additional resources to support African development effectively. The report identified various avenues for enhancing financing, including multi-donor trust funds, green bonds, joint co-investment facilities, and intermediary lending. These innovative approaches aim to bolster the financial capacity of SRDBs and increase funding availability for African countries. The discussion also delved into the challenges African countries face in accessing affordable capital. Sembene highlighted the importance of maintaining high credit ratings for development banks to secure favorable rates in global markets. He emphasized the role of governance frameworks and business models in ensuring creditworthiness and attracting investment. By strengthening these aspects, development banks can improve their access to funding and better serve the financial needs of African nations. The focus on addressing Africa's debt crisis at the G20 meeting signals a positive step towards finding sustainable solutions to support the region's development and economic growth.