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African leaders set for Paris summit on economic recovery
Several African and European head of states are set to meet in Paris for the African Finance Summit which kicks off on Tuesday. The summit will feature discussions on external funding and debt treatment for Africa as well as private sector reforms. On the side-lines of the summit, Nigeria’s President Muhammdu Buhari is expected to meet with French President Emmanuel Macron over growing security threats in the Sahel region. Dayo Amzat, Managing Director and CEO of Zedcrest Capital joins CNBC Africa for more.
Mon, 17 May 2021 12:07:10 GMT
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AI Generated Summary
- The IMF's proposed release of $660 billion in Special Drawing Rights aims to support liquidity and macroeconomic stability, with significant allocations expected for developing economies like those in Africa.
- France's strategic interest in Africa is fueled by the goal of curbing security threats and fostering economic development to combat extremism and terrorism.
- The Central Bank of Nigeria's shift towards the I&E window rates signifies a positive move towards a more transparent and market-driven foreign exchange system, while Nigeria's strategic import policies aim to bolster local production capacities and reduce import dependency.
African and European heads of state are gearing up for the African Finance Summit set to take place in Paris this week. The summit aims to address critical issues such as external funding, debt treatment for Africa, and private sector reforms. One of the key highlights of the summit is Nigeria's President, Muhammad Buhari's expected meeting with French President Emmanuel Macron to discuss the escalating security threats in the Sahel region. Dayo Amzat, the Managing Director and CEO of Zedcrest Capital, shared valuable insights on the topics that will be at the forefront of discussions. Here is a detailed breakdown of the key themes and points discussed during the interview. The IMF has proposed a substantial release of general Special Drawing Rights (SDR) amounting to $660 billion in response to the economic fallout caused by the COVID-19 pandemic. This allocation aims to boost liquidity in the markets and assist governments in managing macroeconomic shocks. While a significant portion of the funds will be distributed among developed nations, developing countries like those in Africa stand to benefit. Estimates suggest that approximately $35 billion could be channeled to low-income economies, potentially doubling their reserve balances. For instance, Zambia is anticipated to witness a notable impact, and Nigeria, having previously accessed $3.5 billion through the rapid finance initiative last year, stands to gain from the increased allocation. The reallocation of surplus liquidity from developed to developing markets could further bolster the African economy. France's vested interest in supporting Africa's economic growth stems from a strategic standpoint, aiming to curb migration to Europe and combat extremism and terrorism on the continent. Addressing economic disparities and enhancing macroeconomic stability in African nations is seen as a proactive measure to mitigate security threats. In a bid to harmonize exchange rates and enhance transparency, the Central Bank of Nigeria (CBN) has been gradually transitioning towards utilizing the Investors and Exporters (I&E) window rates. This move signifies a shift towards a more market-driven approach to forex management. The recent fluctuations in the official market rates indicate a potential convergence towards the I&E rates as the new standard. While the finer details of this transition are yet to be officially announced, it signifies a positive step towards a more flexible and efficient foreign exchange system in Nigeria. Despite a recent uptick in food imports, it is crucial to note the context of Nigeria's import expenditure. The current figures, although showing a nominal increase, remain significantly lower than previous years, reflecting a gradual reduction in the country's reliance on food imports. The surge in food imports can be attributed to the reopening of the economy post-pandemic restrictions. However, a large portion of these imports align with Nigeria's backward integration policies, wherein certain industries are granted leeway for imports to facilitate local production capacity building. This strategic approach aims to boost domestic production and reduce import dependency in the long run. Overall, the upcoming African Finance Summit holds significant promise for fostering economic recovery and sustainability in Africa. The discussions and decisions made during the summit have the potential to reshape financial strategies and development agendas across the continent, with a focus on inclusive growth and resilience in the face of global challenges. The collaborative efforts between African and European leaders underscore a shared commitment to advancing economic progress and addressing pressing issues that impact the region's socio-economic landscape.
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