Over the years, discussions around financing Africa’s development and economic transformation have been on the front burner, however, one thing that has always been reechoed is the need for major structural reforms that would benefit every African. Thus, the ongoing African Development Bank (AfDB) annual meeting served as another platform to draw up ways to accelerate Africa’s development.
In his address yesterday, Muhammadu Sanusi II, the Emir of Kano and former Governor of the Nigerian Central Bank, emphasized the need for Africa’s development agenda to focus on the upliftment of Africa’s trade and economic ecosystem, and prioritizing the socio-cultural and commercial interests of Africans.
“Africa’s economic transformation will be best achieved through fast-tracking regional cooperation and the execution of hard-nosed structural reforms that focus on the development of the continent’s human capital and material resources,” said Emir Sanusi II.
Africa’s debt burden continues to inhibit capital investment in industrialization, he observed, lamenting the misallocation of resources: “We need to begin to ask ourselves, ‘what do we do with the available funds in our coffers?”
The region’s debt profile has been growing at an alarming rate. An International Monetary Fund (IMF) report reveals that about 40 percent of low-income countries in the region are now in debt distress or at high risk of it. Countries like Cape Verde, The Gambia, Congo, Mozambique, and Mauritania have public debt to GDP [Gross Domestic Product] ratios near or above 100 percent, according to Brookings. Also, some of these debts obtained are lost to illicit financial flows out of Africa that the AfDB estimates at $50 billion annually.
“Perceptions matter. So there is an urgent need for improved transparency, as this is clearly linked to good governance,” the Emir said. “We need to accept that we have a perception problem that we must address. We need to tackle corruption, block leakages and create opportunities for new jobs.”
Lamido Sanusi, who was a successful banker before his appointment as governor of the Central Bank of Nigeria in 2009, pointed out the importance of leveraging private sector financing and creating a business environment for the sector to thrive. “Private sector capital is crucial for sustained economic growth but so is government’s intervention in guaranteeing business externalities like power, water and waste management, roads, housing and the legal and regulatory environment for innovation, commerce and industry,” he said.
Private sector investments in sub-Saharan Africa are the lowest in the world compared with other developing economies; the IMF puts it at about 2 percent of its GDP. However it could generate $50 – 80 billion in additional revenues from private investments, which is more than the estimated $36 billion in official development assistance received by sub-Saharan African countries in 2016.
The monarch advocated a series of structural reforms, including strategic investments in key sectors including agriculture, infrastructure, education, and small and medium enterprises. He also called for deliberate industrial diversification noting that China has begun to move its mega-sized manufacturing capabilities out of low-cost industries.
On trade, the Emir called for a regional and pan-African approach to trade negotiations, a tactical model which should be led by the Bank.
“The African Development Bank has the intellectual resources and clearly is better positioned to negotiate with China on behalf of Africa as a bloc of nations,” he said. “Europe approached global trade as a bloc so why can’t African nations do the same? This is clearly another area in urgent need of the Bank’s intervention.”
The Bank’s week-long 53rd Annual Meetings is ongoing in Busan, South Korea, and attended by finance and development experts, business leaders and Finance Ministers from Africa and other parts of the world. The theme for this year’s event is “Accelerating Africa’s Industrialization.”