Africa & Special Drawing Rights
Unlocking Africa’s Potential: Navigating Special Drawing Rights
Welcome to our comprehensive database examining Africa’s engagement with the International Monetary Fund’s (IMF) Special Drawing Rights (SDRs) – an international reserve asset created in 1969 and periodically allocated to Member States. Under the IMF’s Articles of Agreement, the IMF can establish unconditional liquidity, referred to as general allocations of SDRs to its members.
In August 2021, the IMF issued its largest-ever SDR general allocation of US$650 billion to bolster global liquidity and support member states in their post-COVID-19 recovery. Unfortunately, due to the IMF’s quota-based distribution system, African countries received only about 5% of this total, approximately US$33 billion, despite facing significant economic challenges exacerbated by the COVID-19 pandemic. On the contrary, a high-income country such as the United States received US$113 billion. This disparity has sparked discussions about reforming the IMF and SDR process to better support low- and middle-income countries, in particular reforming the quota system and reallocating SDRs from high-income countries.
Our SDRs platform delves into these issues, providing detailed analyses and data to foster informed dialogue on creating a more equitable financial system that empowers Africa’s economic resilience and development.
EXPLORE OUR DATA
Africa Map Showing SDR General Allocation 2021 and Total SDRs
The choropleth map below illustrates the variation in the 2021 SDR allocation across the African continent. As shown, countries like South Africa, Nigeria, Egypt and Algeria received a greater allocation of SDRs than other African countries. This disparity is due to the IMF’s quota-based system which favours higher-income countries.
DR Key Takeaways:
- The total 2021 SDR allocation was US$650 billion.
- Africa received only 5% of this total, approximately US$33 billion.
- African countries collectively hold a significantly smaller share of SDRs compared to regions like Europe and North America.
- Africa received a disproportionately lower share of SDRs in 2021, despite facing severe economic challenges post-COVID-19.
- The IMF’s quota-based allocation system heavily favours advanced economies.
- There is an ongoing call for SDR rechannelling and reform to better support low- and middle-income countries.
Take up Rate (%) of 2021 SDR Allocation by IMF Geographies
The graph below presents the take-up rate of the 2021 SDR allocation, showing the degree to which countries have drawn upon their allocated SDRs. As the graph depicts, African countries collectively made greater use of their SDRs compared to other regions. A similar trend is seen in the Latin America and the Asia and the Pacific regions as low- and middle-income countries utilize their SDRs more than high-income countries. This graph highlights the importance of low- and middle-income countries receiving more SDRs as they are the ones that need and utilize SDRs the most.
DR Key Takeaways:
- Majority of African countries utilised their SDR allocations (87%), highlighting their critical need for liquidity.
- This contrasts with some wealthier regions where take-up rates were much lower, as they rely less on SDRs for economic stability.
- SDRs played a key role in supporting African economies during the pandemic.
Breakdown 2021 and 2024 SDR allocation 2021, 2024, and total SDRs per African country
The first graph below illustrates the total SDRs (in SDR units) allocated to African countries since the inception of IMF general allocations. The second graph focuses specifically on the total SDRs allocated to African countries (in SDR units) in the August 2021 IMF general allocation. Both graphs indicate a similar trend, higher income countries like South Africa and Nigeria received more SDRs due to their higher quotas while smaller countries like São Tomé and Príncipe and Comoros received only a minimal share.
DR Key Takeaways:
- Largest recipients: Nigeria (SDR 3.35 billion), South Africa (SDR 4.15 billion), Egypt (SDR 2.8 billion), Algeria (SDR 1.87 billion)
- Smallest recipients: Sao Tome & Principe (SDR 19 million), Comoros: (SDR 23 million),
- The distribution of SDRs across African countries varies significantly, with larger economies receiving significantly higher allocations.
- Small island nations and low-income countries received minimal allocations, despite their high debt burdens.
- Discussions on reallocating unused SDRs from wealthier nations to Africa remain critical for economic recovery.
Usage of SDRs by African Countries
The chart below details the ways in which African countries have utilized their SDRs. As shown in an earlier graph, Africa’s take up rate from the 2021 SDR general allocation was 87%, underscoring how important SDRs are for African countries. The chart below illustrates the diverse ways African countries have utilized their SDRs including boosting their foreign reserves, fiscal support, clearing arrears, debt repayments and meeting external financing needs. A reform of the IMF quota system to allow for African countries to receive more SDRs as well as a reallocation of SDRs from high-income countries to African countries would allow African governments to use their SDRs in critical sectors and development priorities.
DR Key Takeaways:
- Many African governments used SDRs for fiscal support and to boost their foreign reserves.
- SDRs were used for debt repayment and reserves accumulation, indicating concerns about sovereign debt sustainability.
- The IMF has encouraged countries to maximize SDR impact, but more flexibility in SDR use remains a key demand from African policymakers.
Previous DR Work:
- Infographic: Infrastructure spending to meet the SDGs and debt sustainability – how to square the circle? https://developmentreimagined.com/infrastructure-spending-to-meet-the-sdgs-and-debt-sustainability-how-to-square-the-circle/
- Report: The African Development Bank is the Best Route for Special Drawing Rights in Africa: https://developmentreimagined.com/the-african-development-bank-is-the-best-route-for-special-drawing-rights-says-a-new-report-by-development-reimagined/
- Infographic: African SDRs – How they are used, distributed, and what needs to change: https://developmentreimagined.com/african-sdrs-how-they-are-used-distributed-and-what-needs-to-change/
- Infographic: How can the IMF Quota System be Truly Reimagined to Work for Africa? https://developmentreimagined.com/how-the-reimagine-the-imf-quota-system-to-work-for-africa/
