NEW YORK — In a recent interview, Professor Jeffrey Sachs, a prominent American economist, highlighted the critical challenge facing African economies due to the disproportionately high interest rates they pay compared to other regions. This financial burden, he argues, significantly hampers the continent’s development efforts.

According to Ethiopian News Agency, during his exclusive discussion with ENA, the persistent high-interest rates, anticipated to continue through 2024 and beyond, pose a unique obstacle for African countries. These nations have seen their public debt levels surge in recent years, exacerbated by increased government spending to combat the impacts of global crises such as the Covid-19 pandemic and inflationary pressures. Sachs pointed out that Africa’s need for capital, infrastructure, education, and natural capital is crucial for its development and potential to achieve significant economic returns. However, the current global financing system fails to support these needs adequately.

“It (Africa) should be the fastest-growing region in the world, but the high-interest rates are seriously impeding the continent’s development,” Sachs stated, underscoring the urgency for reform in the international financial architecture. Such reform would enable African countries to access low-cost and long-term financing necessary for building the infrastructure and modernization required for progress.

In response to these challenges, the African Union has expressed its commitment to expedite the creation of its own financial institutions. This initiative aims to overcome the shortcomings of the current global financial structure, which is not conducive to Africa’s transformation and development aspirations. The establishment of these institutions is expected to enhance Africa’s access to capital, implement impartial debt management mechanisms, and ensure fair credit and risk assessments.

Sachs, in his role with the United Nations, mentioned his active involvement in advocating for these financial reforms at the international level. He highlighted his efforts to promote the inclusion of the African Union as the 21st member of the G-20, now referred to as the G-21, as a strategic move to ensure Africa’s voice is heard in critical financial reform discussions.

The economist also criticized wealthy nations for their failure to fulfill financial promises made to Africa, stressing the importance of Africa’s participation in negotiations to hold these countries accountable. “There were so many promises on climate finance and restructuring debt in a sensible way, yet very little has been accomplished,” he remarked, emphasizing the need for immediate action beyond mere discussions.