Telesphor Magobe
Africa-Press – Liberia. AFRICA is endowed with abundant resources, but is plagued with financial and resource mismanagement, grand corruption scandals and the vicious spiral of public debt. As a result, Africa still lags behind in social and infrastructural development, and in responsible and effective leadership.
With regard to financial and resource management, a United Nations Conference on Trade and Development (UNCTAD) report on public debt of 2025 suggests public debt can be instrumental in development as it enables governments to finance priority sectors, and invest in people’s better future.
However, the report stresses, when public debt grows excessively or its costs outweigh its benefits, it becomes a heavy burden to the country and its people. “This is particularly challenging for developing countries, which face an annual sustainable development financing gap of $4.3 trillion, often, while contending with high debt costs.”
The UNCTAD report highlights two issues: 1) that the global public debt is aggravated by a series of cascading crises in recent years, and 2) it shows how the growing debt burden disproportionately impacts developing countries, where public resources are increasingly diverted from essential development needs to service public debt.
The report stresses that developing countries must not be forced to choose between “servicing their debt, and serving their people.” Therefore, there is a pressing need “to reform the international financial architecture to address the mounting challenges of global public debt and to fast-track progress toward sustainable development.” Unfortunately, many countries are likely to miss out on sustainable development goals (SDG) by 2030.
The UNCTAD report says at least 60 countries explicitly call for policy reforms to encompass making the system more inclusive and development-oriented, “enhancing the availability of liquidity in times of crisis, creating an effective debt workout mechanism that addresses current deficiencies, and providing more and better concessional finance.”
Another report titled “Financing The Africa We Want 2025” recommends a fundamental shift: “Africa must own and define its financial agenda, grounded in governance, accountability, and regional integration.” What is recommended to Africa essentially concerns each African country, including Tanzania. Why? It is because many problems facing Africa are the same problems facing each African country.
The “Financing The Africa We Want 2025” report notes that there is diminishing foreign aid which must be looked into critically so that African countries conduct their affairs independently of it. The report points out that foreign aid has been important for African countries and the most recent aid diminishing trend will have substantial effects on key sectors of the economy such as health or civil society support.
The report acknowledges that the good news is that Africa has resources to make things work for the betterment of African people. What remains is political will to utilise resources responsibly for both present and future generations.
To make Africa’s paradigm shift a reality, the report recommends three points. First, domestic financial resources can be well-utilised and fairly distributed. This can be done by containing illicit financial flows that continue draining the continent more than official development assistance (ODA) received, managing an external debt which now represents the unacceptable level of a quarter of the continent’s GDP, strengthening domestic tax systems, redirecting African sovereign and pension funds toward local and regional investments and making better use of remittances.
Second, responsible and effective use of domestic natural resources to benefit and prioritise African people. In relation to this, the report says Africa is home to 30 per cent of the world’s mineral reserves and owns between 5 and 75 per cent of the global reserves of the minerals critical to building a green global economy.
To do this, there is a need for prioritising good governance, with better and more transparent contracts and licensing agreements to ensure Africa’s abundant natural resources translate into wealth for its citizens, rather than profiting only foreign companies. “The same applies to our renewable energy resources, which should be prioritised to put an end to a situation where half the population of the continent still has no access to energy.”
Third, there is a need to attract more private capital. “Private capital, local and international, is a key engine for development. It has not always been forthcoming for various reasons, including high interest rates stemming from risk — real or perceived. We cannot just blame rating agencies,” the report says.
To do this the report says improvement in good governance (rule of law, stability and transparency) is central to attracting investment. “But we cannot make a plea to international investors while we channel our own capital elsewhere. African investors must also invest more in our own continent. The fact that only 14 per cent of foreign direct investment (FDI) in Africa comes from African investors is not acceptable,” the report cautions.
Thus, the report says there must be a shift of focus from additional financial pledges to debt treatment, special drawing rights (SDR) allocation, risk assessment and coverage. From partners the report says there should be more sharing of soft power, rather than just dwindling financial handouts: expertise, technical knowledge information – only those will help leverage Africa’s domestic resources.
The report places more emphasis on Africa’s sole responsibility to focus on good governance, rule of law, security, without which none of this will be possible for ownership comes with responsibility and accountability. It suffices to say that Africa can no longer look for a scapegoat for its own problems, it has to address its problems, and by doing so it can be a capable contributor to the global economy and a better world for all.
source:ippmedia
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