As African leaders gather for the African Union (AU) Summit, the ONE Campaign is pressing for urgent measures to alleviate Africa’s fiscal challenges, emphasizing the disproportionately high cost of capital faced by African nations. The organization is urging leaders to support the Cost of Capital Commission, proposed under the South African G20 Presidency, as a key step toward addressing these inequalities.
The ONE Campaign highlights that African governments are often forced to allocate a significant portion of their revenue to debt servicing, sometimes exceeding investments in essential services like healthcare and education. This situation is exacerbated by the fact that African countries pay, on average, four times more to borrow than wealthier nations.
To combat this, the ONE Campaign is advocating for a comprehensive review of the factors impacting the cost of capital for developing economies. This includes addressing biases in credit rating methodologies and prudential regulations. They are also calling for the replenishment of the African Development Fund (ADF-17) with a target of $25 billion to unlock concessional financing for critical infrastructure, healthcare, education, and climate resilience.
“The current financial architecture was put in place when African countries were colonies. It cannot work for independent sovereign nations,” stated Serah Makka, Executive Director for Africa of the ONE Campaign. Makka stressed that African leaders have a “historic opportunity to reshape the continent’s economic future” by championing the cost of capital agenda.
The ONE Campaign is a global organization that advocates for investments to create economic opportunity and healthier lives in Africa. They use data, grassroots activism, political engagement, and strategic partnerships to influence decision-makers.
