Once again, the philosophy of resourcefulness has been flagged as the way forward for alleviating Africa’s financing challenges. At the ongoing 50th Annual Meeting of the African Development Bank (AfDB) in Abidjan, African countries have been advised to look inwards for the necessary resources to further facilitate their socio-economic development instead of looking outwards for aid.
A session titled “The Future of Financing for Development in Africa” featured two African professionals who spoke to the heart of the matter and reiterated the dire need for African countries to develop the capacity to mobilize resources locally.
According to Emmanuel Nnadozie of the Africa Capacity Development Foundation (ACDF), if African countries bolstered their tax collection capacities, as much as $500 million can be mobilized yearly. Apart from tax, other areas to explore would include the stock market and the sovereign bond market.
The continent has experienced illicit financial outflows of the order of $50 billion per year, way higher than it receives in aid every year. If these outflows were totally curbed, therefore, Africa can potentially eliminate its need for aid. Countries in the region need to build up their capacity to fight corruption or face the real threat of institutional collapse.
Corroborating these facts, Olukorede Adenowo, Co-Head, Financial Institutions, Africa, at Standard Chartered Bank, added that Africa is making progress in overcoming its prior reputation for poverty and instability but still had a lot to do in remedying its macroeconomic volatilities. Hence, greater transparency, more robust governance and stronger tax collection systems are key objectives to realize.
According to him, intra-African trade is a key domestic financing lever for the continent and other enablers would readily include import substitution and product diversification.
Implementing these recommendations will not prove easy, however; as the saying goes, “the devil is in the details.” From political will and sponsorship to the buy-in of the citizenry, a lot will be required to change the historic direction that Africa has followed for decades.