Why 2025 could be a litmus test for African agency

As African countries seek to revitalize global partnerships for sustainable development (Sustainable Development Goal 17), major global financial architecture reform can often seem like a lofty goal—especially when African leaders and finance ministers are having to fire-fight management of currency fluctuations, interest rate increases on external debt, and other monetary shocks. Often, the inclination is to focus less on structural reforms of the system and more on immediate, short-term debt relief or actions African governments can take themselves, such as providing better data or transparency of debt finance.

None are mutually exclusive, and all have merits, but the big prize is reform.

It might sound contradictory, but focusing on short-term solutions such as debt relief or “capacity building” can be detrimental to Africa’s agency and the case for reform.¹ For example, countries cannot claim to be responsible and therefore require less conditionality when borrowing yet call for debt relief for borrowing that their parliaments and citizens have already approved transparently—a situation that has occurred often. These kinds of actions seem attractive and easier in the short term, but in the long term serve to exacerbate perceptions of “African risk.”²

2024 presented exactly this kind of conundrum and demonstrated why, in 2025, the major goal should be structural reform.

2024 marked the 80-year anniversary of the Bretton Woods institutions, as well as the first full year the African Union (AU) served as a permanent member of the G20, the world’s economic version of the United Nations Security Council. The AU’s involvement created movement toward reforms with the emergence of the “Africa Club” or Alliance of African Multilateral Financial Institutions³ and the African Credit Ratings Agency inching closer to being a reality.⁴

Additionally, in August, the IMF announced the addition of a third African seat on its board (out of a total 25 seats).⁵ The International Monetary Fund (IMF) also reduced lending costs by cutting surcharges, benefitting African borrowers.⁶ Despite these recent achievements, major shifts in how the Bretton Woods institutions, credit rating agencies, and foreign investors do business with respect to the continent remained elusive.

Will truly significant, major reforms in Africa’s interest begin to arrive in 2025?

Two new opportunities will present themselves to African governments as settings for achieving reform in 2025 beyond the usual African Union engagements in Addis Ababa and the Bretton Woods meetings in Washington, D.C. First, South Africa became president of the G20 on December 1, 2024.⁷ A strong, ”Africa-focused” G20 can help enable African leaders to advocate for change and offer specific ideas for action. Second, the Fourth International Conference on Financing for Development (FfD) will be taking place,⁸ which, as a U.N. forum, arguably offers Africa an even larger voice than the G20. But what might African leaders put on the agenda for these two special opportunities? There are four potential outcomes linked to specific 2025 deadlines and existing work by these and other international financial organizations.

First, African governments should support a change to the formula of IMF quotas to create more space for African shares.⁹ Such a formula is expected to be presented by IMF staff and agreed upon by the IMF board in June 2025 for the 17th General Review of Quotas. Africa having more shares would not only enable the continent to have a weightier voice on the IMF board for all decisions, but it would also enable governments to actively use the IMF as an automatic stabilizer during economic crises, rather than having to negotiate with the IMF first, which often enables the IMF to impose highly unsuitable and citizen-unfriendly economic conditions.¹⁰

Maintenance of the status quo would mean AU member states continuing to collectively possess only 5.2% of total quotas, while single countries such as Germany and Japan have similar share proportions yet hardly need the IMF for financial stability.¹¹

However, IMF staff should not be left to do the work. African leaders should come up with their own position. For example, were African shares to be doubled and a new formula drawn up on that basis, a decrease in the shares of the largest shareholder—the U.S.—from 17.4% to 16.0% as well as China’s from 6.3% to 5.8% would follow.

Second, African governments should support a change to the IMF and World Bank’s debt sustainability analysis. The IMF and World Bank’s analysis used to determine which countries are classified as “debt-distressed” has been observed to overrepresent African countries.¹² For instance, in 2019, 64 countries around the world had debt-to-GDP ratios over 60%, only onethird of which were African. However, the only 12 countries in this group that were classified as being debt-distressed were from Africa. Post COVID-19, this observed bias increased; in 2022, 79 countries had debt-to-GDP ratios over 60%, again only one-third of which were African. However, the only 23 countries in the group that were classified as being debtdistressed were from Africa.¹³ At the highest international levels, Africa is being portrayed as a risky lending and investment destination, information that organizations such as credit ratings agencies and investors then use to determine their risk premiums. This results in high interest rates that make access to private finance more costly for the affected countries.

There are numerous reasons for this observed bias within the debt sustainability analysis. For example, the current framework does not account for the growth that debt produces, and the thresholds used (such as debt-to-GDP) are not backed by evidence.¹⁴ In 2025, African governments should request that these methods are investigated as part of a review of the debt sustainability analysis that was launched in April 2024 and is expected to continue in 2025.

Third, African countries should aim to bolster African-led and Africa-first financial mechanisms, in order to accelerate progress on the Sustainable Development Goals. The African Development Fund is the second-largest concessional financial instrument available to African countries. It is due to be replenished in 2025, with the African Development Bank (AfDB) calling for its donors—African and non-African—to collectively contribute $25 billion.¹⁵

In addition, no G20 country has reallocated Special Drawing Rights, a claim on the freely useable currencies of IMF members, to the AfDB. The AfDB deserves huge support given its strong delivery on infrastructure, which requires patient capital. Meanwhile, Africa’s other multilateral financial institutions, such as Afreximbank, the Trade and Development Bank, and the Africa Finance Corporation will also continue to raise finances in 2025, and equally deserve significant support for their work from both African governments and external partners.

Fourth, exploring how the financial architecture can be reshaped to deliver more concessional finance and cross-border infrastructure development in Africa—a major gap in development finance that is holding back the success of the African Continental Free Trade Area—to enable borrowers, coordination mechanisms to both consolidate and flourish will be crucial in 2025. These are all areas on which the G20 and FfD can make significant progress.

There is no doubt that 2025 has the potential to be a crucial year to shift the current global financial architecture toward African interests, even more so than 2024. However, African governments must keep their eyes on the prize and, avoid short-term distractions and arguments that make the victims—African governments—do more work while the system remains the same. If anything is a litmus test of African agency in 2025, it will be this.