The international banking system, which does not meet the demands of emerging nations, is charging “extortionate” interest rates to African nations, according to United Nations Secretary-General Antonio Guterres.
He unveiled a $250 million crisis fund to aid famine-prone African villages.
The UN chief wants significant changes made to the international financial system to better assist developing nations.
According to the International Monetary Fund, public debt ratios in sub-Saharan Africa are at their highest levels in more than 20 years.
Many impoverished nations were forced into economic trouble as a result of the pandemic, and the governments on the continent, including Ethiopia, looked for debt restructuring agreements under an IMF program to help them get through the crisis.
The UN has granted the highest amount of money to a crisis fund, which will be used to address various situations throughout the world.
According to Guterres, the global banking system habitually denies debt relief and preferential lending to underdeveloped nations while imposing exorbitant interest rates.
“African countries cannot climb the development ladder with one hand tied behind their backs,” Guterres emphasized the need for transformation in his statement.
Abiy Ahmed, the prime minister of Ethiopia, echoed the appeal and stated that foreign debt restructuring was required to get the nations’ economies back on a growth path.
Leaders from 55 African countries are present at the African Union Summit. The summit’s focus this year is on escalating the continent’s food and security issues.
In other countries, hunger, which is brought on by violent conflicts and severe weather has gotten worse.
After five unsuccessful rainy seasons, hundreds of thousands of people in Somalia are experiencing severe food shortages, putting the country in danger of going hungry.
According to Abiy, Africa is home to one-third of the world’s hungry people, and he urged for a critical analysis of the situation.