Africa’s appeal for $120 billion in AID replenishment faces resistance

The World Bank, other donors are considering a cap of $105 billion to top up the IDA

Major donors and the World Bank are considering a cap of $105 billion to top up the International Development Association (IDA), falling short of the $120 billion requested by African leaders, a new report by the African Future Policies Hub has revealed.

The report, “Assessing Progress Towards Reforming the Global Financial Architecture: An African Perspective,” highlights slow progress in addressing Africa’s climate finance needs, debt challenges and financial transparency gaps.

It underlines the need for urgent reforms in the global financial system, particularly regarding the quota system of the International Monetary Fund (IMF) and the role of multilateral development banks (MDBs).

IDA provides concessional loans and grants to the world’s poorest countries and is an essential lifeline for many African countries.

However, the report warns that without increased commitments, the region risks further delays in achieving its sustainable development and climate adaptation goals.

In a press statement at the release of the report, Maria Nkhonjera, senior policy officer at the Center for African Policy Futures, said: “The assessment shows that little or no progress is being made in addressing the continent’s debt concerns.”

This also includes the high cost of borrowing and actual disbursements relative to financial commitments and commitments, which Nkhonjera said calls into question the frameworks of transparency and accountability in the funding ecosystem.

Key findings of the report note International Monetary Fund (IMF) quota imbalances, where African countries continue to hold a disproportionately small share of voting power, limiting their influence in financial decisions.

It also revealed that the admission of the African Union (AU) to the G20 and the appointment of a third sub-Saharan African representative to the IMF’s executive board marked steps towards stronger representation.

“While progress has been made in financing loss and damage, commitments to finance adaptation remain insufficient. African nations continue to receive international climate change funding primarily in the form of loans, often at market rates, posing a significant challenge.”

AfriCatalyst’s Daouda Sembene said: “Africa continues to rely on loans rather than grants or concessional financing, an unsustainable trend that needs to be reversed.”

The report also highlights limited MDB reforms, with key African priorities such as the re-channelling of Special Drawing Rights (SDRs) through the African Development Bank yet to be fully operationalised.

The G20 common framework for dealing with debt remains largely unchanged, with slow progress in tackling high borrowing costs and lengthy debt settlement processes.

However, the report notes important steps towards a UN tax convention that could help combat tax evasion and increase fiscal capacity in African economies.

In addition, he stressed the importance of securing adequate funding ahead of COP29, where critical decisions on climate finance will be taken. African countries are pushing for a new collective quantified goal (NCQG) based on their needs to finance climate change adaptation and mitigation efforts.

Faten Aggad of the African Future Policies Hub said: “Despite some positive developments, much work remains, particularly in providing new and additional financing at the scale needed to support Africa’s climate and development goals.”

Iskander Erzini Vernoit of the Imal Initiative for Climate and Development also argued that reforming global financial structures is crucial, especially for Africa in relation to the UNFCCC.

“Significant international grant-equivalent funding is essential, amounting to hundreds of billions, to effectively address mitigation, adaptation and loss and damage needs,” Vernoit added.

African leaders are also urging developed nations to meet the UN official development assistance (ODA) target of 0.7 percent of gross national income, warning that current funding levels are falling.

The report highlights the importance of political pressure and advocacy to drive meaningful reforms in global financial governance and unlock the trillions needed to finance sustainable development in Africa.