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The African Economic Research Consortium (AERC), in collaboration with Canada’s International Development Research Centre (IDRC) and the Overseas Development Institute (ODI), hosted a pivotal side event at the 2024 Annual Meetings of the African Development Bank Group in Nairobi.
The event centered on the crucial theme: “Making the Global Financial Architecture Work for African Countries.”
Amid frequent global shocks and geopolitical uncertainties, such as the Russia-Ukraine conflict, African economies face significant challenges. These include limited access to resources, rising inflation, interest rate hikes, and currency depreciation, all of which have exacerbated debt burdens and restricted many African countries from accessing international financial markets.
“This session is a critical platform to address the urgent need for reforming the global financial architecture to better support African countries. By sharing evidence-based policy proposals, we can foster resilience and sustainable growth in the face of global shocks,” said Prof. Victor Murinde, Executive Director of AERC.
One key solution to these challenges lies in the adoption of a central digital currency, which could play a transformative role in Africa’s financial architecture and solid policies. Central banks are at the heart of financial ecosystems, and discussions around implementing a central digital currency could be pivotal for Africa’s economic development. A central digital currency could streamline cross-border transactions, enhance financial inclusion, and provide a more stable financial system.
As African economies continue to grow, establishing a secure Digital Single Market by 2030 is essential. This market would ensure the free movement of persons, services, and capital, allowing individuals and businesses to seamlessly engage in online activities in line with the African Continental Free Trade Area (AfCFTA).
Dr. Kathryn Toure, Regional Director of IDRC, highlighted, “This event is an opportunity to highlight innovative practices and policy directions that significantly impact Africa’s economic resilience and development.”
“To drive digital transformation, it is crucial to create a harmonized environment that guarantees investment and financing driven by solid policies. This can be achieved by setting up a digital sovereignty fund to close the digital infrastructure gap, ensuring accessible, affordable, and secure broadband for all, regardless of demography, gender, or geography,” she added.
Additionally, promoting open standards and interoperability for cross-border trust frameworks, personal data protection, and privacy is vital. Raising awareness and addressing issues related to cybersecurity and personal data protection is also essential.
African countries must also take the lead in managing and using Country Code Top-Level Domains (ccTLDs), ensuring that technical and administrative operations meet international standards. This will foster trust in African domain names and bring financial, economic, and socio-cultural benefits to the continent.
Furthermore, building inclusive digital skills and human capacity across various sectors, including digital sciences, judiciary, education, and vocational training, is crucial for leading and powering digital transformation.
