Ruto warns global financial system is outdated and costly for developing nations

President William Ruto has stepped up his criticism of the global financial order, saying it is built in a way that continues to lock African countries into expensive borrowing and limits their ability to invest in long-term development.

Speaking during a public lecture in Rome on Tuesday, Ruto said the structure of global finance no longer matches the realities faced by developing economies and needs urgent adjustment to reflect fairness and balance.

He argued that many African countries are judged using risk systems that do not capture their true economic position, leading to higher borrowing costs even when their fiscal indicators are stable.

“Today, African countries face disproportionately high costs of capital, not always due to underlying fundamentals, but as a result of structural biases in global risk assessment,” he said.

Ruto warned that this situation has created a long-standing burden in the form of a risk premium, which makes it harder for African governments to raise funds for key projects.

“The result is a persistent risk premium that raises borrowing costs, limits investment and slows development,” he said.

He pointed out that global lending patterns often place African countries at a disadvantage compared to wealthier economies, even in cases where debt levels are similar or lower.

The President also raised concern over sudden credit rating downgrades, saying they tend to worsen financial pressure on developing nations and sometimes come before any actual default risk is clear.

“In times of crisis, we have witnessed abrupt credit rating downgrades, sometimes preceding actual defaults, triggering capital flight and further constraining fiscal space,” he said.

Ruto said these trends highlight the need for urgent reforms to ensure that the global financial system becomes more accurate, balanced, and responsive to different economic conditions.

“More than ever before, a more just, balanced and responsive global financial system is an absolute imperative,” he said.

“This is not a call for concession. It is a call for fairness, for accuracy and for a system that is truly global in both design and outcome.”

He warned that if reforms are not made, developing countries risk being trapped in a cycle where access to affordable capital remains out of reach despite rising development needs.

“Without such reform, we risk perpetuating a cycle in which those who most need capital to grow remain those least able to access it,” he said.

Ruto said affordable financing is essential for Africa, especially at a time when countries are focusing on infrastructure expansion, climate response, and industrial growth.

He made the remarks while addressing shifting global conditions, noting that economies around the world are facing pressure from conflicts, climate change, and rapid technological change.

According to him, existing global systems for trade and finance were created under different global conditions and are now under strain, leaving many developing nations operating under outdated frameworks.

“We are living through a period in which many of the certainties that have defined the global order for decades are faltering,” he said.

The President said Africa should not be seen as a high-risk region but as a continent with strong economic promise, driven by its young population and expanding markets.

He highlighted the African Continental Free Trade Area as a major opportunity for growth, saying it connects a market of more than 1.4 billion people with a combined economic value of about 3.7 trillion dollars.

Ruto said boosting trade within Africa and investing in value addition would help reduce reliance on raw exports and support industrial development across the continent.

He also raised concern about climate financing, saying Africa is among the most affected regions by climate change yet receives a small share of global climate funding.

“Climate leadership must be measured not by declarations, but by results,” he said, urging increased financial support for adaptation and clean energy initiatives.

The President added that Kenya is working to position itself as a regional hub for investment and innovation, particularly in digital services and renewable energy.

He said the country is engaging both local and international partners to support infrastructure development while managing public debt responsibly.

Ruto maintained that Africa’s development is closely tied to global economic stability and fairness in financial systems, arguing that exclusion weakens both regional and global progress.

“When we create opportunities in Africa, we strengthen global markets, enhance stability and build shared prosperity,” he said.