Time for a Next Generation Africa

The recent allocation by the IMF of $650bn in Special Drawing Rights (SDRs) triggered a widespread debate on their use for alternative purposes to their usual role as instrument to fix balance of payments disequilibria. This paper re-examines the main proposals put forward in the last few months, and suggests that a different direction should be taken, at least in Europe. Given the strategic relevance of Africa to the future of Europe we suggest the EU Member States should consider pooling part of the SDRs recently received to launch Next Generation Africa. This major investment plan, of both grants and loans, would aim to: trigger endogenous growth in Africa; strengthen African regional integration; and help European recovery. A few, not necessarily mutually exclusive, institutional settings and scenarios are considered.