African leaders push credit reforms at Nairobi summit with France

African leaders used the second day of a summit with French President Emmanuel Macron on Tuesday to push for easier access to credit that could help fund major investments and boost economic growth.

A years-long campaign by African governments for reforms to reduce their borrowing costs got a boost on Monday when Macron said he supported creating a first-loss guarantee mechanism to de-risk investments on the continent and would lobby for the idea at the G7 summit next month.

African governments argue they suffer from an unduly high perception of risk among lenders, which can make credit prohibitively expensive. “The issue … is not liquidity.

It is risk architecture,” Kenyan President William Ruto said in remarks to the Africa Forward Summit in his country’s capital Nairobi on Tuesday.

At Macron’s invitation, Ruto will attend the G7 summit in Evian-les-Bains, France and hopes to build momentum this week for proposals he can take there.

More than 30 African government leaders as well as heads of multilateral financial institutions and business executives from across Africa and France are attending the Nairobi summit, the first France has held in an English-speaking country.

France aims to use the event – which Macron said had ‌mobilized 23 billion euros ($27.01 billion) of investments in Africa – to develop new partnerships in Africa after seeing its influence fade in former colonies in West Africa.

U.N. Secretary-General Antonio Guterres noted that African countries face borrowing costs that are twice as high on average as advanced industrialized economies.

“That is not a market verdict on Africa. It is a verdict on the injustices of the system,” he told the summit.

Decrying what they say are biases against them that overstate the continent’s risk, African governments have called for changes to the methodologies used by credit ratings agencies.

Major agencies including S&P Global Ratings, Moody’s and Fitch reject accusations of regional bias, saying their ratings are based on globally applied, publicly disclosed criteria.

Macron’s proposal of a first-loss guarantee mechanism would help boost capital flows into Africa. It is part of a broader push to mobilize private capital for African nations as rich governments cut back on development financing in favor of defense and other domestic priorities.

While other G7 nations have voiced support for making global financial institutions more responsive to African needs, the level of support for specific proposals is unclear.