President Akufo-Addo (right) exchanging pleasantries with Dr Ernest Addison, Governor, Bank of Ghana, after the meeting. Looking on is Ken Ofori-Atta (left), Minister of Finance. Picture: EDNA SALVO-KOTEY
President Akufo-Addo (right) exchanging pleasantries with Dr Ernest Addison, Governor, Bank of Ghana, after the meeting. Looking on is Ken Ofori-Atta (left), Minister of Finance. Picture: EDNA SALVO-KOTEY

Developing African economies: Build strong financial institutions 

President Nana Addo Dankwa Akufo-Addo has stated that without Africa’s own strong financial institutions, the development of the continent will remain a mirage because relying on foreign capital is both risky and costly.


He said the reliance would also lead to huge financial leakages through the high cost of default-driven borrowing and interest payments and undermine the growth of African financial institutions’ domestic resource mobilisation and private sector development through cost of fund. 

President Akufo-Addo, who is the African Union (AU) Champion of Financial Institutions, stated this when he opened the 30th anniversary and the Annual Meeting of the Afreximbank in Accra yesterday.

On the theme: “Delivering the Vision, Building Prosperity for Africans”, the five-day meeting has attracted over two dozens of sitting and former Presidents and Prime Ministers of Africa and the Caribbean as well as leaders of global financial and other institutions.


“The ownership of our financial institutions should be strengthened over time to enhance continuously their development and relevance,” President Akufo-Addo said and suggested that some key interventions were important to strengthen the development impact and financial wherewithal of such development financial institutions. 

He suggested capital and effective coordination with the AU as two main points and touching on capital, he said, despite consistent efforts made by many African governments, including during extremely difficult macroeconomics in global operating environments, Africa’s development finance institutions remained highly undercapitalised.

Providing examples, President Akufo-Addo mentioned the Japan Bank for International Cooperation as having a share capital of $19 billion, China EXIM with capital of $54 billion, whereas Afreximbank had a capital of $6 billion which excluded recent contribution by countries supporting the ongoing general capital increase. 

He called for an evaluation to determine whether the $6 billion was sufficient to play that catalytic role of accelerating the creation of the market with the potential combined Gross Domestic Product (GDP) of $3.4 trillion for Africa. 


He implored the management of the bank to implement a strategy to upgrade its current credit rating from Triple D to A, a move that would require continued strengthening of its governance and management structure as well as personnel. 


President Akufo-Addo recounted the reckless behaviour of rating agencies that resorted to procyclical downgrades that shut countries such as Ghana out of capital markets and turned liquidity crisis into a solvency one. 

He said Afreximbank provided timely support that helped Ghana to navigate the macroeconomic management challenges worsened by Russia's war with Ukraine in an orderly manner “when suddenly we realise we were alone”.

The President said Ghana was the favourite child of bondholders and had gone to the capital market at the height of the pre-COVID-19 downturn but was suddenly shut out of the international capital markets.


President Akufo-Addo recounted how the Afreximbank quickly put together a counter-cyclical trade liquidly facility to help member countries brace the trade financing gap as a result of the adverse commodity terms of trade shocks.

That intervention, he explained, averted the cascading effect of trade payment defaults which could have turned liquidity crisis into a longer lasting solvency and banking crisis.

The President and Chairman of the Board of Directors of the Afreximbank, Professor Benedict Oramah, indicated that the Pan-African Payment and Settlement System (PAPSS), which was being implemented, would save the continent $5 billion in intra-African transfers, expedite, and enable payments for intra-African trade in African currencies. 

With PAPSS, it is now possible for a Gambian to buy Nigerian urea fertilisers using Gambian Dalasi to purchase Naira; for a young Ghanaian to pay for holidays in Seychelles in Ghana Cedis, and for a small farmer in rural Zambia to stream her favourite Nollywood movie paying in Zambian Kwacha.

He added that soon it would domesticate all intra-African payments and extend same to the Caribbean Community and Common Market (CARICOM), where just a few days ago, the Association of CARICOM Central Banks adopted PAPSS as its preferred payment infrastructure for a pilot project. 

That had put the continent closer to a full integration of African and CARICOM economies, Prof. Orama added.  

“With PAPSS, every African currency will become convertible within Africa. Afreximbank backs the clearing and settlements with an amount of $3 billion,” he said. 

“With this level of financial commitment to start up the initiative, you can now understand why for 60 years it never saw the light of day; you can now appreciate why we need our own institutions if we hope to attain our development aspirations,” Prof. Orama added.  



The Minister of Finance, Ken Ofori-Atta, dwelling on the 30th anniversary of Afreximbank, said it was time to celebrate and reflect on the milestone, adding that in the Holy Bible, 30 years symbolised when those chosen by God manifested their destiny.

He gave the examples that Jesus Christ started his ministry at age 30, David became king at 30, John the Baptist came out of the wilderness at 30 and Joseph was 30 years when he became the second in command to Pharaoh in Egypt.

Afreximbank milestones

The African Export-Import Bank is the trade finance and facilitation vehicle of the African Union.

The 30-year-old bank has come up with many subsidiaries and policy interventions, including a procurement platform known as Africa Trade Exchange (ATEX), the Trade Finance Facility (AFTRAF), organising biennial Intra-African Trade Fairs, MANSA repository platform, the Pan African Payments and Settlements Systems (PAPSS), and the Intra-African Trade Fair (IATF) and Trade Impact Mitigation Facility platform.


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