Amid worsening debt and financial instability, African nations have agreed to create a fund aimed at offering low-cost financing to governments facing economic hardship.

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Named the African Financial Stability Mechanism (AFSM), this initiative will be administered by the African Development Bank (AfDB), as reported by Reuters on Tuesday.

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With an independent credit rating, the fund will have the ability to raise capital from global financial markets, according to a statement from the bank.

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The proposal for this facility first emerged in 2022 when the economic fallout from the Covid-19 pandemic and the Ukraine conflict pushed several developing countries into debt crises.

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Participation in the initiative is voluntary, and all African Union member states will have the opportunity to join, the bank confirmed.

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