INTERVIEW Rescuing the SDGs in Africa

Hanan Morsy: Re-examining the global financial architecture

Hanan Morsy: Re-examining the global financial architecture
  • PublishedSeptember 19, 2023

Given the international credit crunch and rising interest rates, coupled with severe depletion of the financial resources African countries have at their disposal, it has become essential to re-examine the global financial architecture. Hanan Morsy, Deputy Executive Secretary of the UN Economic Commission for Africa, outlines how the organisation is working with a high-level working group to find solutions in an interview with Wanjohi Kabukuru.

Africa’s rising financial and climate challenges, with several countries facing debt distress and climate vulnerabilities, are a major concern, says the ECA’s Hanan Morsy.

Since 2022, the ECA has been coordinating the African High-Level Working Group on the Global Financial Architecture, bringing together finance, planning and economic development Ministers alongside the African Union, African Development Bank, African Export-Import Bank, World Bank Group, and the International Monetary Fund.

The working group serves as a platform aimed at building consensus among African policymakers on key proposals for reforming the global financial architecture to reflect the changed times.

“African countries spend between 5-15% of their GDP a year to handle climate impacts. This severely affects Africa’s ability to tackle [strategic] climate action,” says Morsy.

She says the aftermath of the pandemic, the war in Ukraine and climate shocks have had a significant impact on African economies, which means that the continent will need to enhance expenditure efficiency and prioritise on investments with higher yielding returns. “The resources to mitigate the impacts of these shocks and the cost of financing are increasingly unaffordable. Some of the key things that are needed include improving the terms of lending that Africa faces, lowering the cost of financing and extending maturities,” she elaborates.

Morsy, who doubles as the Chief Economist of ECA, cited the Sustainable Debt Coalition championed by Egypt to boost sustainable climate-smart growth through innovative financing tools as one of the ways the continent is pursuing green financing.

“Countries need to look at the new things they could do to enable action, [such as] increasing domestic resource mobilisation, enhancing the integrity of carbon markets, and developing value chains in a more sustainable way to benefit a variety of the issues we are dealing with,” Morsy says.

Reflecting on the ECA-led working group, she says: “We have several tasks that have been articulated through ministerial statement in terms of priorities and are derived from what the continent is going through, including the series of global shocks and increasing socio-economic pressures and high inflation.”

Morsy says the 2023-2024 period presents a critical moment for the world to accelerate reform efforts as advocated by the continent, and aligned to UN Secretary-General António Guterres’ proposals on international financial architecture restructuring.

“The key issue for Africa is the cost of reborrowing. Even when interest rates were historically low following the easing of the global financial crisis, African countries benefited but still paid substantially higher rates than other countries with similar economic conditions.

“That in itself affects African countries negatively. Currently African countries use 22% of their revenues on average to service their debts, which means diverting resources from social, health and education sectors to debt servicing. We need to make sure that the borrowing cost of financing is affordable,” she argues.

Reforming the financial system

Morsy, who grew up in Cairo, Egypt, and whose hobby is snorkelling, has been at the centre of international development finance planning for decades. She has gained considerable experience as a research director at the African Development Bank, lead economist in charge of the Middle East and North Africa region with the European Bank for Reconstruction and Development, and as Senior Economist at the International Monetary Fund.

In our discussion, she acknowledges the progress made towards reforming the global financial system, such as the establishment of the resilience and sustainability trust fund.

She noted that discussions are still ongoing on support for countries facing debt distress, as well as on attracting affordable, blended, innovative green and blue financing mechanisms to support Africa’s climate goals.

Acknowledging that the envisaged reforms are challenging, Morsy calls for more inclusion accompanied by action. 

“The series of global shocks have set back the continent at least two decades. This increases the scale of the challenge but doesn’t make it impossible. We need countries to act because the cost of inaction is high.”

Rescuing the SDGs in Africa

The UN Sustainable Development Goals (SDGs) are a comprehensive set of global goals to end poverty, protect our planet, and improve the living conditions of the global population. This article appeared in a special edition of New African guest-edited by Antonio Pedro, Acting Executive Secretary of the UN Economic Commission for Africa, that assesses where Africa is in obtaining these crucial goals. To access more articles click here.

Written By
Wanjohi Kabukuru

Wanjohi is an award-winning international environmental investigative journalist, whose specialty covers environment, geo-politics, business, conservation and the Indian Ocean marine development. Over the last 17 years Mr. Kabukuru has written extensively on energy, marine science and environmental conservation. His articles have been published in top-notch publications as African Business, African Banker, Inter Press Service (IPS), New African, BBC Focus on Africa, Mail & Guardian (South Africa), Africa Renewal, 100Reporters, and Radio France International (RFI) among numerous other publications.

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