Financial Innovation to Help Fight Africa's Economic Vulnerabilities

Daniel COHEN (†) * École normale supérieure ; Paris School of Economics, Finance For Development Lab.

Brendan HARNOYS-VANNIER ** Économiste, FDL-CEPREMAP. Contact : brendan.harnoysv@gmail.com

Sébastien VILLEMOT *** Économiste, CEPREMAP. Contact : sebastien@dynare.orgCet article s'inspire de Cohen et al. (2022). Il n'aurait pas été possible sans les brillantes contributions de Daniel Cohen qui nous a quittés il y a un an. Nous avons écrit cet article en sa mémoire.

In recent years, African economies have faced growing debt and liquidity challenges due to diverse a series of external shocks on international markets, compounded by regional- and/or country-specific vulnerabilities. This paper proposes a framework for an African Liquidity and Stability Mechanism (ALSM) to ease these pressures, which would offer tools aimed at liquidity support and crisis prevention. This mechanism includes instruments to stabilize borrowing costs, to hedge against commodity fluctuations, and enable sustainable debt restructuring. The ALSM would aim to improve access to affordable financing, to bolster resilience to external shocks, and to promote the development of robust financial markets across Africa.