Sierra Leone Telegraph: 22 June 2024:
The Mo Ibrahim Foundation has just released a new report covering a wide range of topics relating to the urgent issue of finance for Africa to achieve its development goals.
According to the latest figures, Africa’s financing gap continues to widen, leaving the continent’s development agenda behind.
The report found that the money to address this is largely there, and instead calls for a complete financing paradigm shift to accelerate progress on Africa’s development and climate goals, including a radical reboot of the current multilateral financial system, an African-owned growth and development model as well as reconciling development and climate goals to avoid a ‘crowding out’ effect.
Here are some highlights of the report:
Financing Africa: Where is the money?
TRILLIONS NEEDED BY 2030 Still a long way to go to implement Africa’s development frameworks Though highly variable, all figures point to substantial financial needs
Spotlight: The UN’s SDGs: where do we stand two-thirds through to 2030
Spotlight: The AU’s Agenda 2063: assessing the first decade of progress
CLIMATE: A COMPLEX FRAMEWORK, MAINLY UNDERFUNDED
Climate change might lead Africa‘s GDP to lose up to $50 billion per year by 2030 Between 2020-2030, Africa’s needs to fulfil its NDCs amount to $2.8 trillion Adaptation vs mitigation: in Africa, adaptation should get the lion’s share
Spotlight: Climate finance vs development finance: a crowding out effect?
External resources: better money, rather than just more money
ODA TO AFRICA: AROUND 10% OF THE CONTINENT’S TOTAL FINANCIAL RESOURCES Africa received over 28% of global ODA in 2022
10 countries capture nearly 50% of total ODA to the continent
Still main donors, DAC countries and multilaterals are slowly decreasing their support, while non-DAC countries are steadily increasing
Dormant ODA funds
Spotlight: Financial support conditions and modalities vary extensively Health and education remain the main priorities of ODA to Africa
Spotlight: Climate finance for Africa: at $29.5 billion in 2022, it covers less than 11% of estimated needs
AFRICA’S PUBLIC DEBT
THE MAIN CHALLENGE External public debt stock: tripled since 2009
Spotlight: Africa at risk of debt crisis due to servicing costs and structure Debt servicing: a growing burden Debt structure: its increasing complexity hinders relief options Among key challenges: high borrowing costs, punishing conditions and surcharges, default on partners’ commitments
FOREIGN DIRECT AND PORTFOLIO INVESTMENTS IN AFRICA
A COMBINED WORTH OF OVER $200 BILLION AS OF 2022
FDI in Africa: $45 billion in 2022 FPI in Africa: approximately $185 billion as of 2022 from G7 countries and China
Spotlight: African Stock Exchanges: only 2% of the global stock market capitalisation
AFRICAN RISK ASSESSMENT: THE ELEPHANT IN THE ROOM?
21 African countries have never received a sovereign risk rating Spotlight: Could coverage of the remaining 21 countries yield additional FDI? Only two African countries classified as “investment grade”
Is there a perception premium? Quis custodiet ipsos custodes?
Spotlight: The 2023 Nairobi Declaration: Africa’s leadership on debt, financing, and multilateral reforms Chapter 03. Domestic resources: unlocking Africa’s own financial resources
Spotlight: Financing Agenda 2063: at least 75% on average per country should come from domestic resources
PREVENTING LEAKAGES THROUGH ILLICIT FINANCIAL FLOWS
Africa loses up to $100 billion each year to IFFs
Better data and stronger capacity needed for tackling IFFs IFFs enablers are mostly, but not all, outside the continent
STRENGTHENING TAX SYSTEMS
Africa has the lowest government revenues of all world regions
Africa’s tax revenues relative to GDP: half that of OECD countries
LEVERAGING AFRICAN REMITTANCES, AFRICAN SOVEREIGN WEALTH FUNDS AND AFRICAN PENSION FUNDS
Africa accounts for 12.3% of global remittances, with nearly $100 billion in 2022 Africa’s sovereign wealth funds: an estimated combined worth of $120-130 billion, the lowest of any world region
With still less than 6% of its population over 60 years old, Africa’s pension funds remain relatively low
VALUING AFRICA’S ASSETS
Africa’s growing position in the world
Upgrading Africa’s place in global value chains
Spotlight: Regional markets and value chains are crucial
Monetising Africa’s green assets
Spotlight: Leveraging Africa’s natural resources wealth: governance is key
Spotlight: The 2023 Nairobi Declaration: Africa’s potential and ambition in green assets
CONCLUSION
THE MONEY IS THERE, WHAT IS NEEDED ARE BETTER PROCESSES AND STRONGER AFRICAN OWNERSHIP
You can read the full report here:
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