The International Monetary Fund (IMF) and the World Bank have held their first meetings on African land in fifty years in a significant turning point that aims to address the critical issues the continent is facing.
IMF Chief Kristalina Georgieva opened the week-long talks in Marrakesh, Southern Morocco, with a call for wealthier nations to increase their support for debt-saddled developing countries.
These meetings come at a critical juncture as both global financial institutions grapple with calls for reform to better assist vulnerable nations in combating poverty and climate change.
Traditionally held outside their Washington headquarters every three years, the gathering in Marrakesh had been postponed twice due to the COVID-19 pandemic and faced additional uncertainty following a recent powerful earthquake in the region, which resulted in nearly 3,000 casualties.
The last time the IMF and World Bank held meetings in Africa was in 1973 when Kenya hosted the event, with some African nations still under colonial rule. Half a century later, Africa continues to confront a range of challenges, including conflict, military coups, poverty, and natural disasters.
IMF Chief Georgieva emphasized the symbolic and substantive importance of bringing the meetings back to Africa. She noted that the continent faces issues remarkably similar to those of 50 years ago, including high inflation and political upheaval in many places.
Georgieva stressed the need for increased capacity to support countries in need, suggesting the provision of zero-interest loans on a larger scale.
“Bringing the meetings to Africa, again, is symbolically and substantively very important,” she said at a meeting with members of civil society organisations.
“Many countries are under a burden of debt that can crush them and we very, very much hope that the meetings would be a place to build more trust among nations. We all need each other,” she added.
One key aspect of the proposed reforms is the transformation of the quota system to allocate more funds to lower-income nations. This move is intended to free up resources that wealthier nations would not require, allowing them to be redirected to developing countries. However, there is resistance from Western powers concerned about the redistribution of votes that might strengthen China’s influence.
The World Bank is expected to confirm plans to enhance lending by $50 billion over the next decade through balance sheet adjustments. World Bank President Ajay Banga has proposed an even more ambitious goal of raising capacity by $100 billion or up to $125 billion through contributions from advanced economies.
However, the finalization of these plans is not expected to occur during the Marrakesh meetings.
In a symbolic gesture, the IMF and World Bank are poised to grant Africa a third seat on their executive boards. Nevertheless, the discussions were not without criticism from representatives of non-governmental organizations (NGOs).
Some argued that the quota system perpetuates a neocolonial and racist legacy, while others voiced concerns about IMF-imposed austerity measures that hinder public spending on health and education.
“I hear many of you saying, ‘oh, you’re for austerity’. No we are not,” Georgieva replied.
Georgieva responded to these concerns by highlighting the need for fiscal responsibility, likening government spending to household budgets.
“I think it’s a lot of the same things and I’m very worried because Covid-19 should have showed us more than ever it’s important to prioritise health systems, education and social protection,” she added.
“I want a rethink of this system.”
Despite this response, some activists called for a reevaluation of the current economic system, emphasizing the importance of prioritizing health systems, education, and social protection.
Outside the meeting venue, a group of activists protested, advocating for an end to fossil finance and a focus on dignity over debt.