Ghana Defies The West

In a bold new move to defy the west and its economically suffocating institutions, Ghanaian President Nana Akufo-Addo is calling on all African leaders to unite and invest 30% of Africa’s foreign reserves in Africa’s own financial institutions.

This revolutionary proposal, unveiled at a recent African Union summit, seeks to empower the continent economically by retaining and leveraging more capital within Africa. For too long, Africa’s wealth has been deposited overseas to benefit western nations who then dangle loans and aid back to Africa on punishing terms.

By collectively depositing national reserves in African development banks and funds, nations can strengthen these institutions to better finance infrastructure, agriculture, and development projects tailored to local needs across the continent.

This watershed moment represents Africa taking charge of its own financial destiny and breaking free from neo-colonial dependence on western monetary institutions.

The status quo has drained Africa’s potential for too long. If united, Africa’s leaders can forge a new equitable financial architecture founded on homegrown African solutions for the benefit of all citizens. The era of western financial dominance is ending. The era of Africa rising has begun.

Ghanaian President Akufo-Addo Bold Proposal

President Akufo-Addo’s call for African nations to invest 30% of their foreign reserves in African institutions is a bold and visionary proposal that could significantly empower the continent economically.

For too long, Africa’s wealth has been extracted and exploited by Western powers who then lend it back with onerous conditions. Investing in African banks and financial organizations would keep more capital within the continent to be reinvested in African development and growth.

At the recent African Union summit, Akufo-Addo argued persuasively that the status quo is not serving the continent well. With negative interest rates on reserves held in Western banks, Africa gains little while the West prospers from African deposits. It is time for a change.

The Ghanaian President powerfully said it is time to strengthen the continent’s financial and multilateral establishments to increase their capacity to support the continent’s developmental agenda with the catchphrase “God helps those who help themselves.”

The President to this end pointed to the fact that it is time for the African people to look inward and to support themselves to develop.

“We are all in agreement that the way the global financial architecture works is not in our favour, and there is the need to make some fundamental and systemic reforms. But making the reforms also requires that we, Africans, also take some steps that will assist us to have a greater impact in the way in which our economies are financed.

“As it stands, virtually all our countries hold our reserves in foreign banks, attracting largely negative rates of interest. The proposal that I am going to put to the plenary is that we should decide that a minimum of 30% of the reserves of each one of us, sovereign reserves, should be invested in the African multilateral institutions,” President Akufo-Addo advocated.

Akufo-Addo added: “I speak about the AfDB, I speak of Afreximbank. We should strengthen their balance sheets and strengthen their capacity to facilitate more and more resources for our development. If we find a way that we can increase the financial power of our institutions, we are in a better place to finance our development.”

By investing 30% of reserves in institutions like the African Development Bank and Afreximbank, African nations can strengthen these organizations and enable them to better finance infrastructure, business, and agriculture across the continent.

Akufo-Addo envisions a future Africa that is self-sufficient and in control of its own capital, not dependent on the West for loans and aid with painful strings attached.

Western banks will probably argue that they are safer for asset storage and that African institutions lack capacity, but this deficit can only be overcome by investment in their growth.

With an influx of national reserves, regional development banks will gain assets to leverage for securing private investment in African projects. And storing wealth within Africa will prevent capital flight and retain value in African economies.

As President Ruto of Kenya stated, Akufo-Addo’s proposals are essential for Africa to “leapfrog to its next level of development.”

President William Ruto also said in his statement: “I am very happy that President Nana [Akufo-Addo] has made two fundamental proposals that I fully support. He has proposed that we must empower our own African financial and multilateral institutions. He has proposed that 30% of all our reserves that are in all manner of places earning sometimes, negative interest, we should make it available to our African multilateral institutions. I agree one hundred percent. It is a step in the right direction.”

The old model of relying on Western benefactors has not served ordinary Africans. The time has come for African wealth to build African prosperity.

In addition to reserve investment, Akufo-Addo called for an annual African economic summit to set financial and development priorities for the continent. This will enable cooperation and planning without having to travel abroad seeking support from China, India, Japan or the United States. A regular African summit would allow leaders to consult with each other on African solutions to African challenges.

President Ruto stated in this regard: “I also agree that instead of globetrotting and going to every other place, we need to organize our own development financing and economic summit where we invite those who want to do business with us to come and engage with us,”

He added: “I think it is only fair that we have made good our part of the bargain. We have gone to many capitals. Surely, it is time for them to come to ours, and I think we will not be asking for too much. I will take up the challenge if it is agreed that that be the case, I will offer to host the first summit,” the Kenyan leader further remarked.

Western critics claim Akufo-Addo’s proposals exhibit an antiquated nationalist or anti-globalist perspective. But after centuries of colonialism and global finance structures weighted against African interests, it is reasonable for leaders to seek economic independence and empowerment.

If national reserves are earning negative interest in the West, why not invest productively in Africa’s future?

The increasing calls for financial justice and African economic liberation should be heeded. Africa cannot afford to continue losing billions in capital flight and negligible returns on reserves. Its people urgently require infrastructure, education, healthcare, business investment and agriculture financing to meet sustainable development goals.

Building strong African lending institutions is a critical first step. With reserves redirected into regional development banks, the leveraging power of capital will grow in service of pan-African needs.

This prudent reserve strategy will also lessen reliance on predatory IMF and World Bank loans that have trapped nations in debt and dependency for generations.

The Alliance of African Multilateral Financial Institutions (AAMFI)

On another positive note, the newly launched Alliance of African Multilateral Financial Institutions represents a monumental step towards greater economic unity and financial sovereignty for the African continent and will bring President Akufo-Addo’s bold vision into life.

By bringing together major development finance institutions like the African Development Bank, Afreximbank, Africa Finance Corporation, and others, African nations can collectively pool financial firepower and forge homegrown solutions.

Africa will not rely anymore on external funding sources like the World Bank and IMF who impose policy conditions out of sync with local needs.

Now the continent will gain a greater say in its own financial destiny. The Africa Club enables coordinated, African-led resource mobilization, lending and financial regulations tailored for 21st century African realities.

The Africa Club also provides the continent greater leverage in global financial negotiations, governance reforms and standard setting. Africa’s voice and vote can no longer be sidelined or silenced. The alliance empowers its members to demand fairer representation in forums like the G20 and Basel Committee where rules are set that deeply impact African economies.

By thinking bigger together, the AAMFI can birth made-in-Africa financial solutions like an integrated payment system, a rating agency catering to SMEs and digital currencies facilitating intra-Africa trade. Homegrown innovations will meet needs better than imported systems.

This is Africa’s moment to rise through economic synergy and collective institutions. No longer will piecemeal, country-by-country dependence on outside capital be the norm. The Africa Club points the way to coordinated mobilization of domestic resources and markets under sovereign African control.

Some worry that growing African financial institutions could increase risky lending, corruption and mismanagement of funds. But Akufo-Addo is not advocating unsafe practices, rather he wants to funnel reserves into reputable banks like AfDB and Afreximbank with sound governance controls.

Additionally, investing in African institutions should facilitate financial transparency, especially if strong shareholder nation oversight is exerted. Reserves could even be deployed strategically for anti-corruption and governance reforms. Wise use of national savings will make African banks exemplars of integrity in the global financial system.

In the past, African voices calling for bold economic changes were ignored. But today, leaders are uniting behind a coordinated vision to empower the continent financially.

The status quo has not served Africa’s 1.4 billion people who remain largely impoverished and deprived of basic services and infrastructure. Investing national reserves in Africa to fund sustainable development is social justice in action.

The time is now to create a new equitable financial architecture no longer beholden to neo-colonial monetary forces.

Akufo-Addo’s proposals represent a chance to break free from economic dependence and take control of Africa’s resources to benefit all her people. If financial institutions can be strengthened by national reserves, the entrepreneurial spirits of citizens can be unleashed.

Sovereign backing for regional development banks will instill confidence in Africa’s economic future and talents. Local savings should be for local needs, not sit idly in foreign banks.

Let this be the era when Africa invests in herself for the prosperity of all her children. The continent’s leaders must unite behind this wise vision for financial autonomy and collective advancement.