Context:
The 37th African Union Summit was held in Addis Ababa, Ethiopia.
Key highlights of the summit: At the summit, the Africa Club was launched.
Africa club is the Alliance of African Multilateral Financial Institutions (which are African owned and controlled).
Objective: To raise Africa’s influence in the global financial system by aligning its functions with the SDGs and the African Union’s Agenda 2063.
Members: African Export Import Bank, Trade and Development Bank, Africa Finance Corporation, African Reinsurance Corporation, African Trade and Investment Development Insurance, Shelter Afrique Development Bank and ZEP – RE (PTA Reinsurance Co).
AGENDA 2063
- It is Africa’s blueprint and master plan for transforming Africa into the global powerhouse of the future.
- Its primary objective is for inclusive and sustainable development
Significance of the summit:
- Establishing a Central African Monetary Union: A proposal has been made to establish three AU financial institutions: the African Central Bank, the African Monetary Fund, the African Investment Bank, and a future Pan-African Stock Exchange.
- Reforms to multilateral development banks (MDBs): Introducing climate vulnerability requirements and increasing MDB capitalization, particularly for those countries that are facing climate-related risk.
- Increasing grant middle-income countries: Affordable grants from the IMF and World Bank to African development banks must be increased to fulfil climate and development goal.
- Redirecting IMF Special Drawing Rights (SDRs) to African financial institutions: It is important to redirect IMF SDRs to MDBs, in order to finance climate action and integrate middle-income nations into the G20 Common Framework for restructuring their debts.