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…AU laments continent’s $89bn annual loss to illicit flows
…calls for homegrown financing to drive growth
Jeffery Sachs, a professor of Economics at Columbia University on Friday made a compelling argument that Africa’s economic future hinges on the continent establishing its own monetary sovereignty—complete with a unified currency, regional lender of last resort, and long-term low-cost financing in its own terms.
“Africa needs its own monetary sovereignty. Africa should move to a monetary union. Africa should be borrowing in its own currency,” Sachs told the audience on the third day of the African Export-Import Bank, Afreximbank’s annual meeting in Abuja.
In his landmark thematic lecture, titled: “African Multilateral Financial Institutions in the Emerging New World Order”, Sachs argued that borrowing in dollars from foreign institutions like the International Monetary Fund (IMF) traps African nations in short-term, high-cost debt, hampering growth and undermining sovereignty.
He challenged Africa’s reliance on external monetary mechanisms, noting that the U.S. Federal Reserve has shown little regard for African economic stability, while the continent’s currencies remain fragmented and externally tied.
“The Federal Reserve has not been Africa’s friend. The Federal Reserve doesn’t give swap lines. The Federal Reserve does not protect Africa when U.S. interest rates soar… So Africa needs its friends all over the world.”
To break free, Sachs proposed an “African lender of last resort”, modeled on central banks elsewhere, to provide liquidity and stability in crisis.
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“Africa should have a lender of last resort, which is not the IMF, because the IMF is not a lender of last resort. The IMF waits until you nearly have debt, and then it lends you some money on punitive terms that prevent rapid growth.”
He recommended partnerships with emerging global players like India, China, Gulf nations to channel “long-term” development capital.
He questioned why the Gulf channels capital to slow-growing markets when opportunities abound in Africa’s high-growth economies.
“Why is it that the Gulf countries promise a trillion dollars to invest in the slow-growing United States when that money should be deployed next door, across the Red Sea in Africa, in fast-growing Africa? This is what needs to be mobilised,” he stated.
Sachs further projected that with proper financing and integration, Africa could reach high-income status by 2063—or even sooner. “Africa needs more debt, not less debt, but not short-term debt.
Long‑term, patient, low‑interest capital to make the massive investments that will bring Africa to high‑income status by 2063. No question, it can be done.”
In challenging the Bretton Woods institutions and short-term lending orthodoxy, Sachs stressed that “Africa’s rise” depends on its ability to finance itself—through its own currency, its own institutions, and a united continental vision underpinned by monetary independence.
Sachs said Africa must sharply boost its investment-to-GDP ratio from around 20–25% to roughly 40%, a leap that demands large-scale investment in three critical areas, including education, infrastructure, and the private sector.
“The key is to raise the rate of investment on the economy…from roughly 20 to 25 percent of the income to around 40 percent of the income,” he suggested.
He called investment in education “the most important single investment,” describing how Africa currently graduates 12 million youth, which is about 30% of its under-17 population, and must aim for universal upper-secondary completion to build a skilled workforce.
Infrastructure, from power grids and transport to digital access, should likewise transcend national borders, Sachs argued, calling for cross-African highways, rail, and power interconnectivity.
For the private sector to thrive, he urged smart industrial policies and regional coordination. “This needs to be a continental-wide effort, not 55 separate times,” he said, envisioning a unified approach through the African Union and African Continental Free Trade Area (AfCFTA).
To finance this ambitious agenda, Africa must majorly rely first rely on both domestic resource mobilisation, complemented by international cheap, long term capital.
While pension funds, sovereign savings, and remittances are important, he highlighted, as echoed loudly at the meetings, the role of African financial institutions in attracting global investors.
He inferred that Afreximbank, African Development Bank, and other regional banks must lead, supported by long-term, low-cost financing with preferred creditor status.
His words: “Afreximbank and other multilateral institutions are in the forefront. They are key for an Africa-wide strategy. They are so crucial, what they absolutely require, without question, is preferred creditor status.”
“They should have all of the status to be the bulwark for Africa’s rapid growth period.”
“The poor regions of the world…have the highest growth potential,” Sachs said, arguing that Africa’s debt problems stem not from scale but from short maturities and high interest.
Selma Malika Haddadi Deputy Chairperson, of African Union Commission, lamented how Africa is losing an estimated $89 billion every year to illicit financial outflows, draining resources critical to the continent’s development,
“That money should be building schools and improving healthcare,” Haddadi said in a keynote speech, stressing the need to stop this financial hemorrhaging through stronger governance, regional cooperation, and tax reforms.
Read also: Africa’s trade, growth outlook positive despite global headwinds – Afreximbank
The continent faces growing challenges amid a fractured global economy, with trade fragmentation, climate crises, and weakening multilateral institutions threatening progress. Against this backdrop, Haddadi called for Africa to assert monetary sovereignty and self-reliance.
“Africa cannot rise without inclusive and sovereign financing,” she said, highlighting how reliance on external creditors and conditional aid has often hampered growth. She praised Afreximbank’s role in providing counter-cyclical loans and pioneering financial tools such as the Pan-African Payment and Settlement System (PAPSS) that streamline cross-border trade.
Haddadi also pointed to Africa’s untapped domestic capital, including pension funds which hold roughly $777 billion in assets that could be mobilised for infrastructure and business investment.
Equally important, she said is the African diaspora, which sends home over $100 billion in annual remittances.
“We must engage them as true partners in Africa’s rise and co-creators of it,” Haddadi said, urging governments and banks to create diaspora bonds and investment funds to channel these funds into development.
She noted that as the world’s youngest continent, investment in quality education, vocational training, and digital access is essential to unlock the youth potential.
Haddadi said regional integration through the African Continental Free Trade Area (AfCFTA) is a key driver of growth and resilience, connecting 55 countries into a single market, with intra-African trade surpassing $200 billion.
She also called for reforms in the global financial system to give Africa a stronger voice and address “biased credit ratings” that increase borrowing costs, with plans underway for a continent-wide rating agency.
“Africa’s rise will not happen by accident. We will rise by design, by determination, and by collective action,” urging unity to build a prosperous future on Africa’s own terms,” Haddadi stated.
Carla Barnett, Secretary General of the CARICOM Secretariat, equally echoed the call for Africa’s self-reliance and strategic partnerships as critical to its rise in a fractured world in her speech.
She underscored the importance of “progressive unity characterised by prioritising shared values, collective vision, dialogue, and collaborative action” as Africa navigates geopolitical and economic uncertainties.
Barnett urged Africa to harness its “significant demographic advantage, natural resource-based, untapped carbon markets, and renewable energy” to become the next frontier of global economic growth.
However, she emphasised that this potential requires bold strategic choices rooted in African agency and innovative policies.
Highlighting the historic and strategic partnership between Africa and the Caribbean, home to a large segment of the African diaspora, Barnett called for a “new model of collaboration” to address shared challenges and opportunities in trade, investment, climate change, and reparatory justice.
She stressed the need for Africa to maintain access to “affordable long-term concessional financing from multilateral development institutions,” citing the Bridgetown Initiative as a platform for joint advocacy to reform the global financial system.
Barnett welcomed Africa’s inclusion as a permanent member of the G20 and hailed the AfCFTA as a “major step” toward integration and prosperity.
