19. In my view: Rethinking development to support Africa’s capacity and access to finance for development
What is a major priority for Africa? Industrialisation and productive transformation, which will also enable the creation of jobs on the continent.
How do we bring about this transformation? On the one hand, there is official development assistance that needs to be channelled more to finance the development of quality infrastructure and to support existing African regional funds. On the other, there is building the international enablers for Africa to have its own capacity to develop. What do we mean by this?
We can rethink development in Africa around five key themes: lessons from history; Africa amid multiple global crises; building resilience; partnerships; and a new paradigm on development. Lessons from history force us to reflect on the persistence of complex challenges and how to recover and rebuild our economies from the ravages of global crises. While history should not repeat itself, it provides important lessons which can help us rethink and address contemporary, emerging and distant challenges.
We can rethink development in Africa around five key themes: lessons from history; Africa amid multiple global crises; building resilience; partnerships; and a new paradigm on development.
Following calls by Macky Sall – in his capacity as chair of the African Union – in multiple international arenas on financing for Africa’s development, the following recommendations are made in line with regional priorities regarding issues ranging from debt and taxation to post-pandemic recovery, climate change, governance, trade barriers and migration. The emphasis is on the great sense of urgency that the international community must bring to mobilising greater financing to enhance Africa’s capacity for sustainable development.
1. Debt and risk assessment. Support the continent in its demand for debt relief and promote dialogue between credit rating agencies and the African public sector to rationally reconsider Africa’s credit ratings. Development Assistance Committee (DAC) countries could be more active in this regard and improve internal co-ordination in terms of rules. International co-operation and debt relief programmes such as the Debt Service Suspension Initiative can help strengthen African countries’ balance sheets and their ability to repay debt in the medium term. However, some developing countries have been discouraged from joining these programmes, despite the high risks of debt overhang, due to fears that their participation would trigger a rating downgrade
2. Special drawing rights. OECD countries should support Africa’s call to reallocate USD 100 billion in special drawing rights. These additional reserves will help drive a much-needed economic recovery from the impacts of the COVID-19 pandemic, numerous conflicts and climate change.
3. Regional industrial initiatives. Negotiations between Africa and its partners should focus on industrialisation initiatives. Through the African Continent Free Trade Agreement (AfCFTA), resilience can be built to enable good economic and political co-operation. This agreement holds much promise, especially given the persistent gridlock in the multilateral trading system in the World Trade Organization and the political backlash against globalisation in some parts of the world. The AfCFTA is an important engine for continental integration, and its implementation will require building resilience against domestic, regional and global shocks.
4. New model of partnerships. There is a need for partnerships and collaborations that foster mutual benefits and inclusivity among different stakeholders at the local, national and international levels. New partnership models that reflect Africa’s growing aspirations and its unique challenges are indispensable. As a start, the OECD and the DAC can ensure that international partnerships acknowledge and support Africa’s quest for sustainable development. Crucially, this would also require an appreciation of the continent’s efforts to determine its destiny. But to be clear, these efforts do not in any way preclude the need for partnerships. Rather, partnerships should be designed to be mutually beneficial.
5. A new paradigm for Africa’s development. It is important to focus on how we can repurpose current developmental strategies and create fit-for-purpose mechanisms for shoring up Africa’s resilience to both regional and external shocks. Such mechanisms will need to steer the continent into a post-COVID era of development. For example, governments need to increase their accountability to citizens through more effective collection and utilisation of tax revenue from global corporations. This type of action can build goodwill among citizens. International co-operation that builds on shared values and ethical goals can minimise negative spillover (and maximise the positive) effects of shocks.
6. Operationalising the role of the African Union Development Agency and promoting a common African position at the global level. Rethinking Africa’s development co-operation and international partnerships requires a multidimensional approach that looks beyond the goal of simply eradicating income poverty. Focus should fall on developing Africa’s capacities, including the meaningful structural engagement and socio-economic integration of youth by expanding their opportunities to achieve social, economic and political security and contribute to the long-term development of the continent.