Kenyan President, William Ruto, has called on reforms to the International Financial System which he blames for charging African countries and the global south 100 times more for development finance.
"As things stand today, the current financial setup favours the Global North against the Global South. Our compatriots in the Global North are paying anywhere between 0.05% and 0.1%.
"We are accessing development finances 100 times more expensively than they do." – President of… pic.twitter.com/zOzOgSQ8k7
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“The multilateral financial banks and the entire international financial system has not been just, fair and accountable,” said President Ruto to Aljazeera.
“As things stand today, the current financial setup favours the Global North against the Global South. All sovereign states that have gone to the international financial market are paying anywhere around 10%. Our compatriots in the global north are paying anywhere between 0.05% and 0.1%,” he added.
“Clearly we are accessing development finances 100 times more expensively than they do.”
Ruto, who was elected in August 2022, highlighted the severity of the situation as the country has been compelled to reorganize its spending and allocate resources to address the country’s ongoing drought crisis leading to cuts on essential areas like schools and development.
“That is not fair and that is why we have found ourselves where we are and that is why we are saying the current financial setup is rigged against those in the global south, especially in Africa,” he said. “If we have to fund the developments that we have then we have to change the financial system. It is not fit for purpose, it is unjust and not accountable.”
President Ruto highlighted also hit out at the global financiers and markets for rewarding countries that cause pollution, highlighting the need for an accountable and fair system, without any bias, even in favor of Africa.
“We need a new system that understands and make those who have brought us here to the climate crisis that we have the emitters and polluters to be held to account,” said Ruto. “All we are asking is that we want to have an even conversation. We do not want a financial system that favours us but we want a fair one.”
In a recent virtual meeting with the Rockefeller Foundation Board of Trustees in March 2023, Ruto pointed out that disbursement of development financing also takes long to be released, with financing taking 24 months. He proposed shorter periods of between 12 and 18 months.
Ruto said the needs of the developing world have changed fundamentally since the World Bank and the International Monetary Fund (IMF) were set up after the Second World, and so should the financing instruments.
“The experience with climate change and the Covid-19 pandemic should make us understand the need to eliminate the North-South divide, and that boundaries are irrelevant. For our Eurobonds, Kenya pays 10 per cent interest, while some countries pay up to 15 per cent, but nations in the Global North borrow at interest as low as between 0.1 and 0.5 per cent.”
President Ruto said financing that fits the needs of Africa and the rest of the Global South is what stands between the countries and transformation.
“We must make it right for everyone. This is what will make the difference between whether we float together or sink together,” he said.
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