Dr. Richard Adu-Gyamfi, the 2021/22 Mo Ibrahim Fellow at the International Trade Centre in Geneva, stresses the urgent need for Africa to prioritize efficient financial management over simply seeking more funding.
This is crucial for the continent to achieve its Sustainable Development Goals (SDGs) by 2030.
In an interview with News Ghana, Adu-Gyamfi highlighted critical insights from the Mo Ibrahim Foundation’s report titled “Financing Africa: Where is the Money?” The report underscores Africa’s significant financing gap, estimating the continent needs up to $1.3 trillion annually, about 43% of its GDP, to meet the SDGs and the Africa Union Agenda 2063.
“Africa is not on track to achieve the SDGs, particularly in critical areas like Zero Hunger and Good health and Well-Being,” Adu-Gyamfi noted, pointing out that only five countries have reached at least 60% implementation of the Africa Union’s Ten-Year Plan.
The report stresses that the challenge lies not in the availability of financial resources but in their effective management and allocation. Adu-Gyamfi clarified, “It’s about smarter money, not just more money.” By ‘smarter money ‘, we mean funds that are strategically allocated to projects and initiatives that have the potential to yield long-term sustainable development outcomes.
Addressing the international financial system, Adu-Gyamfi urged reforms to level the playing field for the Global South, especially in light of Africa’s vulnerability to the climate crisis. He highlighted the Africa Climate Summit and COP28 as critical platforms emphasizing Africa’s need to secure climate finance without compromising development goals.
The report also identifies significant funding sources for Africa, including foreign direct investment, official development assistance, public-private partnerships, diaspora remittances, and domestic tax revenues. However, challenges such as illicit financial flows and the predominance of informal economies hinder these resources’ effective mobilization and utilization.
“Africa loses up to $100 billion annually through illicit financial flows, which exceeds official development assistance,” Adu-Gyamfi lamented, emphasizing more robust governance and tax reforms to boost revenue generation.
In advocating for policy reforms, Adu-Gyamfi recommended sealing loopholes, facilitating illicit flows and strengthening tax systems to transition more businesses into the formal economy. He underscored the importance of Research and Development (R&D), which remains underfunded across the continent despite its potential to unlock new financing mechanisms.
Looking ahead, Adu-Gyamfi calls for global and regional responses that transcend traditional aid models. He urges a paradigm shift towards cooperative financing deals that prioritize Africa’s economic transformation and climate preparedness, stressing the need for collective action.
“The international community must ensure that climate finance supplements, not substitutes, development finance,” Adu-Gyamfi asserted. Climate finance refers to funds specifically allocated to support projects and policies that mitigate the effects of climate change and promote sustainable development. He emphasized the need for sustainable, inclusive financing models to propel Africa’s development agenda forward.
Adu-Gyamfi expressed hope that the Mo Ibrahim Foundation’s report would serve as a pivotal document, significantly influencing discussions on Africa’s development financing landscape. He advocates for actionable measures to harness and deploy financial resources effectively, underlining the potential impact of the report on Africa’s development.