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Financing for development: The state of the debate in Africa

17-04-2015

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Against the backdrop of intensive global negotiations on the post-2015 sustainable development agenda, it seems opportune to look at the state of the debate on Financing for Development (FfD) in Africa. The latest meeting, which was jointly organised by the African Union Commission (AUC) and the Economic Commission for Africa (UNECA) in Addis Ababa on 30-31 March, provides useful insights on how Africans are thinking about FfD – including, but not exclusively, on the post-2015 agenda.

Which direction to Addis?

Under the theme ‘Implementing Agenda 2063 – Planning, Mobilising and Financing for Development’, African experts and Ministers of Finance, Planning and Economic Development tackled the issues of FfD, covering both the financing of Agenda 2063 and financing the post-2015 framework. The Ministers subsequently endorsed the draft document entitled Financing for development: Africa’s perspectives. The document is a living document and is likely to be further developed in the lead up to the 3rd International Conference on Financing for Development in July.

Table 1 below provides a summary of the key components of this position as detailed in the Joint African Union Commission- UNECA paper for the African regional consultation on financing for development:

Key-Components-African-Position-Financing-Development-ECDPM-Sahra-El-Fassi

Table 1: Key components of the African Position on Financing

While African governments generally acknowledge the support provided by Official Development Assistance (ODA) – and continue to call on traditional donors to fulfil their commitments – there is increasingly widespread conviction that structural transformation needs to be based on ‘home-grown’ domestic resources. Both sources need to compliment each other in a strategic way. For example, African ministers backed the use of ODA and technical assistance for tax reform and public financial management in the lowest income countries in the hope that it can help domestic resource mobilisation (DRM) efforts in the long run.

Furthermore, in order to allocate resources effectively, and finance initiatives where they are most required, there is need for reliable, transparent and timely statistical indicators – strengthening the case for an African “data revolution” – and to target financial support and capacity building to this end. Only then can there be sufficient collection and publication of high quality data that monitors and tracks economic and social targets more effectively in support of development objectives.

Tapping Africa’s wealth

Recent recognition of African resources available to finance its own development plans have stepped up a gear to more proactive calls to actually start tapping into this wealth for sustainable socio-economic development. The Committee of Experts meeting in Addis Ababa, noted in this respect that “[a]lthough African Governments have applauded and reiterated their commitment to the principles endorsed at both the Monterrey and Doha meetings, the decade following the Monterrey meeting highlighted some fundamental gaps in development financing, particularly for African countries pursuing structural transformation”.

The adoption of the Agenda 2063 and the run up to the Sustainable Development Goals (SDGs) Summit in September, as well as financing issues within the continent, have put the issue of ‘Domestic Resource Mobilisation’ (DRM) back on the table. During the AU-ECA conference, a range of ideas were brought forward – including increased taxation, improved public financial management, private sector development and curbing illicit financial flows (IFFs).

ECDPM-Africa-Financing-for-African-Development

Seizing the opportunity

African countries have been working extensively towards developing a common position on development financing as it is not only seen as a way to tackle the issues related to the Means of Implementation of the SDGs, but also as a way to support the financing of the Agenda 2063. With respect to the latter, the priorities of the SDGs are already very much in line with those articulated in the Common African Position (CAP) on the post-2015 development agenda attempts.

Africa’s increased interest in financing its own development is a step in the right direction and in line with international agreements it has signed up to, like the Monterrey Consensus and Doha Declarations – the two predecessors to the FFD3 conference. The discussion around the future of financing for development provides a golden opportunity to support the efforts being undertaken on the continent to promote development. Ultimately, this becomes a responsibility of the local actors themselves.


The views expressed here are those of the author and not necessarily those of ECDPM.

Photo courtesy of Energy for All 2030.

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Comments

James Mackie, ECDPM

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2015-04-29 15:51:25

Dear John, Thank you for your interest in the European Report on Development, which will be published on Monday 4 May as you know. We would of course be happy to meet you at the launch event. I am afraid we do not have a budget to invite people to travel to Brussels for the event, however, we are making every effort to ensure it is available online promptly. Within the next few weeks we will also be arranging a number of other presentations in different cities around the EU and hopefully even further afield. The programme for these will be advertised on the website, perhaps you can attend one of them. As to your substantive point, I entirely agree that there is a lot of finance available and the key issue is making sure it is well used and that it is directed to the places it is most needed. Furthermore, we should not just look at ODA, but also at all other sources of finance, such as private investment and tax revenue in developing countries. So as you will see on Monday, the ERD argues that 'policy also matters'. ODA for its part is a flexible source of funds, so it needs to be used well and among other things in a way that catalyses other financing. I hope you find the ERD interesting reading. Best wishes, James

John Gibb

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2015-04-24 19:28:42

Thanks- To emphasise two things.First,that poor governance is the main and only problem.The finance and other factors flow from this and are secondary.The money is there,but it is "diverted". Development finance too often/mostly substitutes for a governement's own responsibilities.This has gone on so long that it's hardly questioned.The EC/EU budget is considerable and does not carry the weight it should.It is poorly organised and implemented. Second,I have registered for the European Report on development 2015 launching event in Brussels on 4 May 2015. This is a key opportunity in this important year as the MDGs hand the baton over to the SDGs. If ECDPM will be there I would like to meet up as there is so much to do this year,against a difficult backdrop. I have asked the organisers for financial support for travel from London and expenses as I am now retired. If that is not forthcoming does ECDPM have resources for my participation? thanks John

Faten Aggad-Clerx, ECDPM

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2015-04-24 11:44:45

Thanks John for your very pertinent comment. We very much recognize the need to look at governance. In fact, that is one of the dimensions ECDPM is looking into (including on financing). The assessment of previous global approaches (i.e. MDGs) have indeed showed the dangers of turning a blind eye to governance issues and we've tried to raise these questions in processes we're involved in and through our publications. For instance in our latest GREAT Insights.

John Gibb

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2015-04-19 14:52:33

The challenge is simple to identify but so very difficult to address. And easy to avoid in favour of maintaining the status quo. Until or unless governments including those in Africa accept that the development,protection and welfare of their people is their responsibility then at best concessional finance flows will remain marginal in their impact. On a day when the radio informs me of yet another appalling tragedy in the Mediterranean the concern has to be at the complacent and bureaucratic approach to the SDGs,and more broadly to the development issues we are facing. One question from past global approaches is why do they not work.The answer is that bad governance in all its forms is at the root of country problems,but only a few in a country or in the global community are prepared to recognise this.Then everything else falls into place.But it is the sine qua non. We know what the problems facing the poor and disenfranchised are.We have most of the technical solutions to hand. Development does not have to be complicated..But it is not organised to take the necessary decisive steps. Governments and the donor community have failed the poor and remain largely self-serving. ECDPM has a key role to play in getting to grips with the problem,and must not simply fall in with the standard processes and procedures so beloved of the international community at this critical time for the world. Is ECDPM set up to do this? Happy for my em address to be published-we need a dialogue- urgently. John Gibb

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