Posted on May, 8, 2024 at 08:37 am
As the world manages numerous geopolitical and economic challenges—including high inflation and interest rates, conflict, or water and food insecurity—multilateral collaboration is indispensable to achieving both peace and prosperity in a troubled world.
In other words, we need to build bridges rather than burn them if we want to reach our common goals.
Many African nations are particularly vulnerable to the effects of a fragmented geopolitical environment, and it will require an engaged community of nations to help Africa advance.
In recent years, conflict and economic disruption have contributed to interrupted food and fertilizer supply chain systems, leading to higher food prices, and affecting the most vulnerable people and countries first — and most severely. Now more than 2 billion people are food insecure, according to the FAO. Food shortages have prompted 86 countries in the past year to restrict exports or agriculture trade, further exacerbating this growing hunger crisis.
Africa has a much larger proportion (20%) of people facing hunger compared to the other regions of the world, and their numbers continue to rise. The impacts of food insecurity are costly and long-lasting in both human and economic terms.
It is imperative that we work together—through multilateral organizations and coordinated bilateral aid—to provide direct support to Africa and other vulnerable people and nations. We also need to encourage a reduction in trade restrictions on the movement of grain and other food products, and to manage increasingly scarce global fertilizer supplies which are directly correlated with food production.
Another urgent challenge is for African nations to boost economic growth. The continent is expected to deliver 12 million young people into the workforce annually in the coming decades, yet it is creating only 3 million formal paid jobs for them each year. Unfortunately, Africa’s economies are shrinking in per capita terms, depriving the continent of the benefits of its large, young, and dynamic workforce.
African economic growth has, in part, been stifled by increasing debt distress among African nations, causing liquidity constraints amidst limited fiscal space. The average debt ratio in sub-Saharan Africa has almost doubled in just a decade — from 30% of GDP at the end of 2013 to almost 60 % by the end of 2022. Over half of the countries at risk of external debt distress are in Sub-Saharan Africa.
This makes it much more difficult for these nations to grow and reach the Sustainable Development Goals. African nations will need to do their part by building capacity in debt management, mobilizing more domestic revenue, and institutionalizing budget reforms while managing these changes with the help of international partners. Yet they will need additional help from external partners to make durable progress.
During our G20 Presidency, Saudi Arabia spearheaded the creation of an historic global debt restructuring mechanism called the Common Framework which facilitates discussions between all creditors—traditional and emerging official creditors, as well as private-sector creditors. More importantly, the Common Framework provides a credible platform to reach consensus between all stakeholders on the debt treatment to be provided to countries most in need, on a comparable and equal footing.
We need to institutionalize and improve the Common Framework so it can quickly and efficiently lessen the crushing burden of debt, which deprives us of the wealth of poor nations’ human potential.
Meanwhile, trade restrictions have surged, particularly in Africa, impeding the movement of goods and services. This makes it even more difficult for low-income countries to overcome high inflation and interest rates to make progress on poverty reduction. We have to bolster a rules-based, equitable, sustainable, and transparent multilateral trading system, with the World Trade Organization (WTO) at its core, if we want to restore growth and job creation.
Borders between African countries rank among the most restrictive in the world, hindering intra-African trade and investment. The African Continental Free Trade Agreement (AfCFTA) is an important pathway to break these barriers, unlocking the continent’s economic potential by creating a single, continent-wide market that unites 54 countries with a combined population of 1.3 billion and a GDP of $3.4 trillion.
This could boost trade and investment, making the continent more attractive for business partners to integrate Africa into regional and global value chains. It can also create millions of jobs for Africa’s growing population, especially its women and youth. In addition, the World Economic Forum and Saudi Arabia recently launched a new initiative to streamline and expand trade in services between the Kingdom and Africa through regional integration—an area of incredible untapped growth.
As one of the world’s largest multilateral and bilateral aid donors, Saudi Arabia is supporting Africa because we believe it is an investment in the future stability and growth of the regional and global economies, which will benefit us all.
Addressing these challenges won’t be easy, but their scope and potential impacts mean that we must begin the work immediately. Ultimately, we need to work together— as partners — to build a more prosperous and sustainable future.
Source: Africa