The push by policymakers to transform Africa’s financial architecture is getting intense with leaders from different organizations offering new approaches to achieving this objective.

In the latest move, the African Economic Research Consortium (AERC) in collaboration with Canada’s International Development Research Centre (IDRC) and the Overseas Development Institute (ODI) have come together to address “making the global financial architecture work for African countries”.

At a landmark event during the 2024 Annual Meetings of the AfDB, leaders from these institutions engaged in insightful discussions at a time when African economies are grappling with global shocks and geopolitical tensions.

At the moment, African economies are struggling with the impact of crises such as the Russia-Ukraine conflict, which has resulted in restricted access to resources, rising inflation, interest rate hikes, and currency depreciation.

These factors have intensified debt burdens and hindered African nation’s ability to access international financial markets.

Prof Victor Murinde, the Executive Director AERC, highlighted the importance of sharing ideas on this undertaking, noting: “This session is a critical platform to address the urgent need for reforming the global financial architecture to better support African countries.

“By sharing evidence-based policy proposals we can foster resilience and sustainable growth in the face of global shocks,”

One of the key solutions discussed was the adoption of a central digital currency, which could play a transformative role in Africa’s financial ecosystem.

Central Banks are critical to financial systems, and the discussion around implementing a central digital currency is integral to Africa’s economic development.

A central digital currency could streamline cross-border transactions, enhance financial inclusion, and provide a more stable financial system.

As Africa’s economies continue to grow, establishing a secure Digital Single Market by 2030 is essential. The market would ensure the free movement of people, services, and capital, allowing individuals and businesses to engage seamlessly in online activities in line with the African Continental Free Trade Area (AfCFTA).

Dr Kathryn Toure, Regional Director of IDRC, highlighted the importance of the discussions, noting, “This is an opportunity to highlight innovative practices and policy directions that significantly impact Africa’s economic resilience and development.”

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Benefits of digital innovation

She added that driving digital transformation necessitates creating a harmonized environment that guarantees investment and financing, supported by solid policies. This can be achieved by setting up a digital sovereignty fund to bridge the digital infrastructure gap, ensuring accessible, affordable, and secure broadband for all, irrespective of demographic, gender, or geographic disparities.

Additionally, promoting open standards and interoperability for cross-border trust frameworks, personal data protection, and privacy is critical. Raising awareness and addressing issues such as cybersecurity and personal data protection are also essential steps.

African countries must take the lead in managing and using Country Code Top-Level Domains (ccTLDs), ensuring technical and administrative operations meet international standards. This will foster trust in African domain names and bring financial, economic, and socio-cultural benefits to the continent.

Building inclusive digital skills and human capacity across various sectors, including digital sciences, judiciary, education, and vocational training, is also important for leading and powering digital transformation.

This comprehensive approach is necessary to necessary to ensure that the benefits of digital innovation are widely shared and contribute to sustainable development.

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