Addis Ababa (Naija247news) – African leaders have approved the creation of a $20 billion African Financial Stability Mechanism (AFSM) to prevent potential debt crises, the African Development Bank (AfDB) announced.
Thank you for reading this post, don't forget to subscribe!The AfDB, which will host the facility, said the AFSM will obtain its own credit rating to access international capital markets.
The initiative, first proposed in 2022, aims to provide African nations with a financial cushion similar to those in Europe and Asia. It will lend at concessional rates, with beneficiaries required to implement macroeconomic and fiscal reforms.
AfDB Vice President Kevin Urama estimates the AFSM could save African countries $20 billion in debt servicing costs by 2035.
Membership is voluntary for African Union states, with provisions allowing up to 20% non-African participation while ensuring African majority control.
The fund’s establishment comes amid mounting debt pressures, including recent rating downgrades for Gabon and currency depreciation in Kenya.