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.

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

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.

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.

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