African leaders have given their go-ahead for the African Development Bank to establish the African Financial Stability Mechanism (AFSM). The facility, initially called for by the continent’s leaders in February 2022, will seek to prevent debt crises among member nations before they emerge. The AFSM will seek its own credit rating, enabling it to borrow on global capital markets and provide emergency financing at concessional rates. According to AfDB Vice President Kevin Urama, the facility could help African governments save up to $20 billion in debt-servicing costs by 2035. Membership will be voluntary and open to any African Union member state. However, the fund will allow up to 20% non-African membership, provided African nations retain the majority of membership.
Source: Reuters
