Annual Meetings 2024 – Confident Financiers Say Public-Private Partnerships Key to Africa’s Transformation

African financiers have outlined how the latest pandemic, COVID-19, and the challenges of the climate crisis have provided opportunities to transform the continent.

Speaking at an event organized by Moody’s, the influential world credit rating agency, on the sidelines of the Africa Development Bank’s annual meetings in Nairobi, they concluded that Africa has great potential to build resilient and successful economies despite the climate crisis, which has already led to extreme weather conditions across the continent.

The island of Mauritius is at risk from rising sea levels and has recently experienced flash floods that have affected its coastal areas. The Governor of Bank of Mauritius Harvesh Seegolam described how this island has moved quickly to put in place a climate mitigation and adaptation strategy.

“Although it is estimated that Mauritius has only contributed about 0.01% of greenhouse emissions, we are one of the world’s most vulnerable countries to the climate crisis. We require $7.6 billion for that strategy to succeed. 36% will be funded by our government, but the private sector and external funding will be required for the rest,” he said.

Seegolam stressed that the key was to make Mauritius attractive to the private sector and international investors to encourage them to invest in bankable climate projects. Mauritius has issued green and blue bonds and has created a set of key assets that make it a reliable destination for financing.

He added: “We need good governance and ease of doing business so that global investors are comfortable coming in, we need African countries to come together to share best practices and we need to discuss how Africa can up its game. The pandemic presented us with opportunities to rethink and restructure our economy, and now we are reaping the benefits.”

The head of research at the Central Bank of Kenya, Professor Robert Mudida, tells a similar story. Kenya has also been subject to extreme weather events: floods, droughts, mudslides.

“Kenya’s agriculture grew by 7% this year, but in the previous two years we experienced the worst drought since the 1990s. Climate finance is key to transformation. That’s why Kenya has been an early adopter to address climate-related risks to our models We need to address these issues as we look at the global financial transformation,” he told the meeting.

Prof Mudida says public-private partnerships are important to attract investors and develop an export-led economy. He said Kenya currently exports about 40% of its goods and services and aims to be a strong exporter not only regionally but globally. He added that SMEs are critical to this goal and are critical to Kenya’s growth agenda.

The event was hosted by Moody’s Vice President David Roderick.

Moody’s Analytics is a long-standing provider of credit risk solutions to Africa. It publishes credit ratings and provides rating services on a wide range of debt obligations. Moody’s outlook for emerging markets remains cautiously optimistic with GDP growth and easing inflation.

Moody’s analyst Lucie Villa described Africa’s transformation as a “challenge and an opportunity”. She concluded that with climate resilience and inclusive growth, 2024 could be the year Africa builds resilient economies, noting:

“It’s good to look back and see what has worked well. Policy coordination between central banks and finance ministers is essential so that when the next shock comes we can say Africa is better prepared.”

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