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Former Head of UNECA Takes the Helm of the Liquidity and Sustainability Facility

Vera Songwe has been appointed chairwoman of the board of the Liquidity and Sustainability Facility (LSF), a finance mechanism aimed at improving the liquidity of African sovereign debt. Launched by the UN Economic Commission for Africa (UNECA) at COP26 in November, the fund is designed to stimulate Africa’s foreign debt market, thereby cutting borrowing costs for African governments and fostering cheap loans for sustainable development. The LSF helps boost demand for African government bonds by allowing international investors holding government bonds to apply to the LSF for short-term loans, or repos, using the bonds as collateral. This improves the liquidity of sovereign debt issued internationally by African borrowers, by making it easier for investors to turn bonds into cash at short notice, ultimately reducing borrowing costs for countries in the region. The funding mechanism also marks a symbolic moment in the maturity of Africa’s sovereign bond market, Songwe says. “It aims to offer the same financial infrastructure the rest of the world has access to and to level the playing field for African sovereign borrowers. It creates a more sustainable investment environment for Africa.” The Cameroonian economist joins a coterie of influential Africans on the board, including former Liberian president Ellen Johnson Sirleaf, who serves as LSF’s honorary president, and the president of Afreximbank, Benedict Oramah.