Africa must reduce reliance on expensive external loans – Mahama

President John Dramani Mahama has called for urgent measures to reduce the high cost of borrowing for African countries, urging the continent to strengthen its financial institutions and invest a greater share of its foreign reserves within Africa.

The President made the appeal during a meeting with the Chairperson of the African Union Commission (AUC), H.E. Mahmoud Ali Youssouf, as Ghana prepares to assume the rotating Economic Community of West African States (ECOWAS) chairmanship in 2027.

According to President Mahama, improving access to affordable financing will be one of Ghana's key priorities during its leadership of the regional bloc.

Outlining Ghana's vision for its upcoming ECOWAS chairmanship, President Mahama said African financial institutions must assume a more prominent role in supporting the continent's economic development.

He argued that regional financial institutions should provide lower-cost financing to African governments, reducing their dependence on expensive international borrowing.

"We also are the champions on African financial institutions, and we think that there's still more room for our financial institutions to take up the important role of providing lower-cost credit to African countries. Currently, we have to borrow at high interest rates, and our countries are least able to afford it," the President said.

He noted that the current global financing environment places significant pressure on African economies, many of which face high debt servicing costs while pursuing development priorities.

President Mahama also advocated a strategy that would see African countries invest a portion of their foreign reserves within the continent instead of holding them predominantly in overseas financial markets.

According to him, mobilising Africa's own financial resources could create a sustainable source of affordable financing for governments and development projects.

"We should find ways of lowering the cost of borrowing, and one of the suggestions we've been advocating is bringing some of the foreign reserves of African countries back into the continent and lending it to ourselves at lower interest rates," he stated.

He said such an approach would strengthen African economies while reducing dependence on costly external financing.

The President explained that making greater use of African financial resources would enable countries to finance critical infrastructure, industrialisation and social development programmes at significantly lower costs.

He argued that affordable access to capital is essential for accelerating economic transformation, promoting regional integration and improving living standards across the continent.

According to President Mahama, reducing borrowing costs would also improve fiscal sustainability by easing the financial burden associated with servicing external debt.

As Ghana prepares to assume the rotating ECOWAS chairmanship in 2027, President Mahama indicated that strengthening regional economic cooperation and enhancing Africa's financial architecture would feature prominently on the country's agenda.

He believes stronger African financial institutions, combined with increased regional collaboration, can help build more resilient economies capable of financing their own development while reducing exposure to external financial shocks.

The President's proposals align with broader continental efforts to deepen economic integration, promote sustainable development and strengthen Africa's capacity to finance its long-term growth through home-grown institutions and solutions.