Africa must finance own development

Date published on source: 
20 July 2015
Source organisation: 
Southern Times

Harare: The African Capacity Building Foundation (ACBF) says Africa should come up with relevant mechanisms to finance its own economic growth programmes for the continent to own and account for its development processes. The foundation says it is also critical for Africa to fund its own projects in the wake of the global financial and economic crisis, donor fatigue and volatility of foreign direct investment among other challenges prevailing on the globe.

World leaders, and other stakeholders gathered this week for the Third International Conference on Financing for Development (FfD3) in Addis Ababa, Ethiopia. The conference happened at a critical juncture when there was an almost perfect match between the international agenda and the African development vision: the world is looking at the post-2015 international development agenda while Africa is, in addition, setting its transformative Agenda 2063. The common denominator is that both agendas are paying a special attention on how to finance sustainable development and its means of implementation.

ACBF executive secretary Emmanuel Nnadozie said Africa needed to address the challenges of financing its development. 

“The dynamic shifts in the international development landscape makes it imperative to pay more attention to financing development mostly from within: the 2008-2009 global financial and economic crisis; donor fatigue and volatility of foreign aid; commercial interest-led foreign direct investment and new emerging partnerships such as BRICS,” Nnadozie said. “For the continent to own and account for its development process, DRM (domestic resource mobilization) would play a significant role via various means such as broadening the tax base, tackling tax evasion and avoidance, and fighting illicit financial flows.”

Nnadozie said there was potential for African countries to raise additional funds from their nationals scattered across the globe.

“There are possibilities for African countries to raise additional funds via African diaspora remittances, which have the potential to generate some additional US$10 billion annually through securitization and rise up to US$ 20 billion when including diaspor bonds; debt relief measures that could amount to US$114 billion; and curtailing of illicit financial flows which could make some US$50-60 billion available for development,” he said.

A major challenge for resource mobilization, therefore, he said, is, as much as possible, to find mechanisms to raise revenue from taxation as well as savings from income earners. This means, first of all, that the interests of those who pay taxes and those who save must be taken into account when determining economic policies, especially taxation and financial sector policies.

“Second, it also means that both government expenditure policy and financial sector policy must enable the funds mobilized to be used efficiently, using criteria of efficiency that would, with appropriate information, be generally acceptable to the populace at large,” Nnadozie said.

Established in 1991, ACBF builds human and institutional capacity for good governance and economic development in Africa. To date the Foundation has empowered people in governments, parliaments, civil society, private sector and higher education institutions in more than 45 countries and six regional economic communities.

ACBF supports capacity development with grants, technical assistance and knowledge across Africa.

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Commentary: 'Long live foreign aid – whether we like it or not' (Simon Allison, Daily Maverick)

There is no perfect way to finance international development, but one – mobilising domestic resources – makes a lot more sense than the current system, which is hugely reliant on foreign aid. Not that reason and logic played a huge role at last week’s flagship Financing for Development conference in Addis Ababa, where brazen power politics made sure that the rich got what they wanted at everyone else’s expense.