(Ecofin Agency) - Speaking at the US-Africa summit in Washington, the Cameroonian president defended the construction, with partners, of an African capital market in order to gradually move away from Official Development Assistance.

The official development assistance, on which Africa currently depends, no longer meets the continent's financing needs, President Paul Biya defended during the ongoing US-AFrica summit. The Cameroonian Head of State also pointed out that it is currently difficult for the countries to access private financing, which comes with prohibitive and constraining conditions. 

"An example of the constraints is the pledging of certain natural resources by some investors.  The financing models and instruments adopted rather contribute to capital outflow through the loans that do not generate an inflow of funds on the continent but rather a mandatory outflows of foreign currency upon repayment,” President Paul Biya said.  

He indicates that it would be more advantageous to finance the exploitation and transformation of Africa’s resources locally by setting up a capital market that would be more suited to regional financing needs. 

In Africa, the issue of consistent financing is topical, even so with the Covid-19 crisis, during which rich countries overspent at will while Africa had to battle to raise funds with rating agencies ranking the continent as highly speculative. 

The idea of an African capital market is in line with the activities carried out by the African Development Bank, through its Capital Markets Development Fund (CMDTF). Achieving this goal will require greater synergy and speedy implementation by other Heads of State since several joint initiatives are yet to be effectively implemented. 

According to the AfDB, in Africa, most financial markets are shallow, illiquid, and deeply fragmented, giving greeted power to commercial and investment banks that are mostly owned by foreign investors. In that context,  President Biya's call is a reminder that Africa has another financing option, which requires a change in the way actors cooperate.