African Union members have approved a fund to provide concessional lending to cash-strapped governments.
Reports indicate that many member states are ‘beset by debt and billions of dollars in unfunded priorities’ which in hand calls for urgent moves to provide cheaper debt.
Reports also explain that the fund will be regulated by a facility, known as The African Financial Stability Mechanism (AFSM) and managed by the African Development Bank (AfDB)
It will have its own credit rating and will be able to borrow from international money markets, the bank said in a statement.
The call to create the facility was made in 2022 as the Covid-19 pandemic and the war in Ukraine drove sovereign defaults and debt crises in developing countries.
The bank said membership of the fund will be voluntary and open to any member state of the African Union.
