Africa raises USD$30 Billion for infrastructure each year, could do more - ECA
ECA Press Release No. 75/2011
Addis Ababa, 18 May 2011 (ECA) - Africa’s contribution towards the development of its infrastructure is much higher than is generally thought to be, according to statistics coming out of the African Forum on Financing for Development which opened in Addis Ababa today.
In a highly motivating speech, the Deputy Executive Secretary of the UN Economic Commission for Africa, Ms. Jennifer Kargbo, reminded the opening session that out of the US$93 billion that is estimated for developing Africa’s infrastructure each year, (which is about 15 percent of the continent’s GDP), a large share is being financed through domestic resources.
The Information and Communications Service of ECA quotes Ms. Kargbo as saying that out of about USD$45.3 billion spent annually on Africa’s infrastructure, some USD$29.8 billion is financed by
African taxpayers and infrastructure users, US$ 9.4 billion by the private sector – mostly in telecommunications - and the rest from external sources.
“This runs contrary to commonly held perceptions that most of Africa’s infrastructure is financed by external sources of funding”, Ms Kargbo observed in a prepared address by the UN Under Secretary General and Executive Secretary of ECA, Mr. Abdoulie Janneh.
In an encouraging tone about Africa’s financial possibilities, she explained that “illicit flows from Africa each year (about $854 billion during the period 1970 to 2008) could double what ODA allocates to Africa”.
This impacts negatively on Africa’s economies because they drain hard currency reserves, heightens inflation, reduce tax collection, cancel investment, undermine trade, worsen poverty, and widen income gaps.
The State Minister of Finance and Economic Development for Ethiopia, Ato Ahmed Shide, who opened the forum pointed to Ethiopia’s new Growth and Transformation Plan that is based on “wide public participation at both the federal and regional levels”, as an example of successful development initiative financed through local resources.
The African Union Commissioner for Political Affairs, Mrs. Julia Dolly Joiner, underscored the “strong desire on the part of many governments across Africa to uplift the standard of living of their citizenry”, but said that despite its resources Africa encounters difficulties in generating the necessary resources to turn around its economies.
Both the ECA and AUC have held joined and separate sessions on how to infuse the idea of mobilizing domestic resource for Africa’s development. The African Union Commission has been considering a number of options, according to Mrs. Joiner. These include a levy on imports, based on the imposition of 0.2% tax on the imports of consumer goods; levy on Insurance Premium, based on the imposition of a minimum of 0.2% premiums on insurance taken in Africa; and, levy on International Travel, applied to all air travel to and form Africa as follows: US$ 2.00 for short distance and US$ 5.00 for long distance.
It should be noted that some of the proposed options have proven very successful. Mrs. Joiner recalled the existence of the community levy in the ECOWAS region, and the levy on international travel in Senega
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At the level of ECA, a panel discussion was organised in collaboration with the Task Force on Financial Integrity and Economic Development. It would be recalled that it establish a High Level Panel to be hosted by the ECA that would be responsible for the coordination of efforts to combat illicit financial transfers, for example.
The role of the Panel will be to complement and support the work on illicit financial flows currently undertaken by other African and non-African institutions particularly in areas of: commercial tax evasion; criminal activities; and corruption as a way of consolidating domestic resources for development.
“Specifically, the Panel in partnership with ECA’s external partners will promote national and multilateral policies aimed at curtailing cross-border flow of illegal money. In addition, it will make proposals to re-direct the freed resources towards efforts to alleviate poverty and bring about development”, Ms Kargbo added.
However, the reality for Africa’s development remains that the adverse effects of fluctuations in international commodity prices and the low levels of intra-Africa trade, contribute to other factors that make it difficult for Africa to attain development and take charge of its destiny, she said.
Mr. Emmanuel Nnadozie, the Director of the Economic Development and NEPA Division (ECA), whose division is running the forum, summarized Africa’s challenges and wittily said: “Africa cannot depend sorely on external resources for its development;
but domestic resources cannot be gotten without employment, investments and growth”.
In this regard, he said, the theme of the forum - mobilizing resources to accelerate growth and reduce poverty - could not have been more fitting. Mr. Nnadozie explained that the forum will discuss possibilities and avenues for harnessing South-South Cooperation, especially with China, India, Brazil and other new partners for Africa, identifying innovative sources of development finance to complement more traditional sources, as well as the development of micro-finance in Africa.
But more importantly, the Forum is expected to shape Africa’s Common Position related to Financing for Development in view of the up-coming World Summit in Busan, Korea in November 2011 and the High-Level Dialogue on Financing for Development in New York in December 2011.
It will also seek to achieve broad support and ownership among Africans on future directions and priorities to further improve the effectiveness of financing for development, especially for economic transformation in African countries.
Ends.
Issued by:
ECA Information and Communication Service P.O. Box 3001
Addis Ababa Ethiopia
Tel: 251 11 5445098 Fax: +251-11-551 03 65 E-mail: ecainfo@uneca.org Web: www.uneca.org
Media Inquiries, please contact:
Ms. Sophia Denekew (denekews@uneca.org )
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