Media Advisory
25 April 2024 - Africa finds itself at a crucial juncture in its development journey, grappling with challenges that impede progress towards the attainment of the Sustainable Development Goals (SDGs). At the heart of these challenges lies a perplexing paradox: despite its abundance of financial resources, much of Africa's economic potential remains untapped. This enigma was meticulously dissected in the ‘Solving Paradoxes of Africa’s Development: financing, energy and food systems’ report by the Office of the Special Advisor on Africa (OSAA), shedding light on the underlying causes and proposing actionable recommendations to unlock Africa's financial prowess.
Mr. Utku Teksoz, Programme Management Officer at the United Nations Office of the Special Advisor on Africa, encapsulated the essence of Africa's development challenges succinctly: "Understanding Africa's paradox of abundant resources yet unrealized potential is pivotal to charting a path toward inclusive and sustainable development." This sentiment echoed throughout a recent webinar, organized at the margins of the 10th session of the discussing Africa's financial landscape, underscoring the imperative of unraveling this paradox to unleash Africa's full economic potential.
Presenting some of the report's key messages, Ms. Cristina Duarte, the Undersecretary General and Special Advisor on Africa, emphasized the complex interplay of factors contributing to Africa's financial paradox. "We cannot overlook the gravity of conflict and instability in discussions about Africa's development," noted Duarte. "This instability not only hampers development efforts but also perpetuates a vicious cycle of poverty and underdevelopment."
The report's findings shed light on the multifaceted nature of Africa's financial challenges, attributing them, inter alia, to weak governance structures, lack of transparency, and the scourge of illicit financial flows. Ms. Rui Xu, Associate Economic Affairs Officer, at OSAA and a co- author of the report, highlighted the staggering impact of these issues, "Africa generates significant financial resources, yet much of it remains untapped. Mobilizing these resources effectively is paramount for driving sustainable development."
Key recommendations outlined in the report include enhancing revenue mobilization through efficient tax collection and expenditure management. Ms. Xu also pointed out, "Approximately $46 billion in potential taxes in Africa go uncollected due to redundant tax incentives and poor governance. Addressing these issues would unlock fiscal space for critical investments in sectors like health and education."
In addition to domestic reforms, the report underscored the necessity of international cooperation to combat illicit financial flows and rectify inequities in the global financial system. "Africa loses billions of dollars annually to illicit financial flows, draining vital resources from the continent," emphasized Xu. "Collaborative efforts are essential to stem the tide of illicit financial activities and unlock Africa's full development potential."
Looking forward, the report offers a comprehensive roadmap for leveraging Africa's financial resources to drive sustainable development. Teksoz reiterated, "by implementing the recommendations outlined in the report and fostering international cooperation, Africa can unlock its full potential and pave the way for a brighter future."
As Africa makes further strides on its journey towards economic prosperity and inclusive growth, addressing the financing paradox can be considered a game changer to address other development challenges on the continent. With concerted efforts and collective action, the continent can harness its abundant resources to realize the vision of leaving no one behind.
The presentation was followed by a panel discussion bringing together technical experts from two countries presenting their Voluntary National Reviews (VNRs) this year, namely Equatorial Guinea and Zimbabwe, along with experts from the UN System and think-tank representatives. Also joining the conversation were: Ms. Bindang Ndong Okiri, Adviser to the Presidency of the Government on Planning and Economic Diversification, Equatorial Guinea; Ms. Chaturuka Sylocious, Deputy Director, SDGs and Agenda 2063 Coordination, Ministry of Public Service, Labour, and Social Welfare, Zimbabwe; Mr. Bartholomew Armah, Acting Director, Development Planning, Macroeconomics, and Governance Division, United Nations Economic Commission for Africa; Prof. Teddy Samy, Director, Norman Peterson School of International Affairs, Carleton University & OSAA Knowledge Network; and Mr. Ovigwe Eguegu, Policy Analyst, Development Reimagined.
Drawing from their national and regional experiences, panelists emphasized some of the structural impediments that make it difficult for African economies to access development financing in international capital markets in fair terms. Often, the risk perception around African economies is divorced from the underlying fundamentals, and a handful of global credit rating agencies determine the conditions under which African economies can borrow with their one-size-fits-all models. Furthermore, they observed that Africa needs to increase her voice and representation in the international financial architecture. Against that backdrop, panelists highlighted that the Summit of the Future presents a crucial opportunity to initiate transformative reforms to the international financial architecture to ensure a stronger voice for Africa and a more balanced representation reflecting the current realities of the global economy.
The importance of strong institutions and the necessity for capacity building for effective taxation and revenue generation as well as transparency and accountability in public expenditures were also among the other key themes highlighted by the panelists.
While this event was dedicated entirely to addressing Africa’s financing paradox, the aforementioned report by the Office of the Special Adviser on Africa looks at the financing, food and energy paradoxes holistically and makes a strong case for addressing the triple paradoxes through a nexus value chain to deliver a more resilient and prosperous Africa.
Background:
The Africa Regional Forum on Sustainable Development discussed the financing paradox in Africa, with a focus on the need for domestic resource mobilization to accelerate progress towards the Sustainable Development Goals (SDGs). The team also highlighted the challenges of illicit financial flows, high-cost external borrowing, and the diversion of resources towards debt servicing, emphasizing the importance of human capital development, economic growth, resilience, and long-term sustainability. Strategies to enhance revenue generation, address economic challenges, and control debts in African countries were also discussed, with a focus on improving taxation, legislation, and rulemaking to support small businesses and formalize the sector.
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Contacts:
Utku Teksoz (Mr.) Programme Management Officer, Office of the Special Adviser on Africa, teksoz@un.org