African Development Bank Launches Debt Management Training for Fragile States

The PFMA initiative aims to build institutional capacity for better debt management, enhancing financial resilience necessary for development.

The African Development Bank Group has inaugurated a series of training programs to assist 22 transition or fragile states in Africa with more effective debt management. This initiative, named the Public Finance Management Academy for Africa (PFMA), was launched by the Bank Group's African Development Institute. The first edition, "PFMA Spotlight on Public Debt Management in Transition States," commenced with a two-day policy dialogue in Addis Ababa, focusing on sustainable debt management tailored to Africa's 22 most vulnerable countries.

The PFMA initiative aims to build institutional capacity for better debt management, enhancing financial resilience necessary for development. Participants include heads of debt management offices, treasurers, accountants general, heads of revenue authorities, central bank representatives, supreme audit institutions, anti-corruption agencies, civil society organizations, academia, the private sector, lawmakers, and other relevant stakeholders from transition states.

Key Highlights from the Launch:

Positive Strides and Persistent Challenges: Ethiopia's Minister of State for Finance and Economic Cooperation, Semereta Sewasew, highlighted that while Africa has made positive strides in debt management, significant challenges and vulnerabilities remain, especially in transition countries. These countries face a spectrum of political, economic, security, and environmental challenges. She praised the African Development Bank for designing the training program to bolster the capacity of these countries in prudent debt management, enhancing debt productivity, and restoring economic resilience, stability, and growth.

Ethiopia's Progress and Commitment: Sewasew shared that Ethiopia had made substantial progress in improving its economy and addressing debt challenges, acknowledging the African Development Bank as a steadfast partner in this process. She emphasized Ethiopia's commitment to continuing collaboration with the Bank to improve debt management, transparency, and sustainability across the continent.

Public Debt Vulnerability: Public debt vulnerability remains a significant challenge in Africa. According to the IMF, 38 of Africa's 54 countries are classified as low-income and are either in debt distress, at high risk, or at moderate risk of debt distress. Of these 38 countries, 23 are transition states, facing compounded debt issues due to fragility, underdeveloped domestic debt markets, and weak governance and public finance management.

Special Project Implementation: Abdul Kamara, Deputy Director General for East Africa and Director General designate for Nigeria, explained that the training is part of a special project under the Bank's Transition Support Facility. The project, titled "Strengthening the Capacity of Transition States for Effective Management and Mitigation of Debt Distress Risks," is being implemented from April 2023 to March 2026. Kamara expressed hope that participants would gain an understanding of best-practice solutions tailored to their specific debt management circumstances.

Empowering Transition States: Eric Ogunleye, Director of the African Development Institute, emphasized that African transition countries should not be mere loan takers but need empowerment to contract, negotiate, and utilize loans effectively to improve the quality of life for their citizens.

This comprehensive approach aims to mitigate debt distress risks and foster sustainable economic development in Africa's most vulnerable nations, ensuring that they are better equipped to manage their debt and achieve financial stability.