Business News of Sun, 24 Mar 20190
Economic Report on Africa 2019 urges fiscal policy formulation for domestic resource mobilization
The Economic Commission for Africa (ECA) today March 23, 2019 launched the Economic Report for Africa at the ongoing 52nd Session of the Conference of African Ministers of Finance, Planning and Economic Development, in Marrakech, Kingdom of Morocco.
Speaking at the launch, Dr. Vera Songwe, the Executive Secretary of the ECA said Africa needs to improve its tax collection efforts to close the development financing gap. Currently the content has a GDP of $2.3 trillion. According to Dr. Songwe, Africa must increase its tax collection from 12 per cent to 22 per cent.
Urging African countries to improve on their data collection for policy analysis, she said, “without data we can’t do the right analysis. We data we can do good policies,” she added.
Commenting, Adam Elhiraika, Head of the Macroeconomics Unit of the UNECA urged African countries to use fiscal policy as part of domestic resource mobilization to meet the continent’s financing needs.
He indicated that Africa is making progress in social and other areas, but growth varies in different countries and “growth is slow,” he said.
He noted that with a financing gap of 11 per cent of GDP, and with a GDP of almost $2 trillion, Africa needs investment of about $200 million a year or up to $1.3 trillion per year to finance the SDGs.
He said Africa also needs increase in private investments and external trade, adding that the operationalization of the African Continental Free Trade Area (AfCFTA) will boost growth on the continent.
22 of the 54 countries in Africa are required to ratify the AfCFTA and deposit their instruments of ratification with the African Union Commission to bring the agreement into force. So far 21 countries have ratified the AfCFTA, with Ethiopia being the latest and 15 countries have deposited their instruments of ratification.
“The AfCFTA can be the game changer,” he said, adding that Africa needs to grow at a minimum of 10 per cent.
While noting that the poverty rate on the continent has declined from 54.3 per cent in 1990 to 36 per cent in 2016, inequality is still high.
Ahmed Kamaly of Egypt urged African countries to look for financing from the private sector and civil society and called on governments “to work on changing the structure of their economies.”
The Report notes among others that Africa is at a critical juncture in its development trajectory, noting that policies adopted now will determine how quickly the continent accelerates growth and creates prosperity for all.
“In 2015, African countries signed up to two important development agendas: the global 2030 Sustainable Development Goals (SDG), which aims to leave no one behind as countries develop, and the African Union’s Agenda 2063, which sets out a blueprint for the “Africa we want”. A decade away from the SDG endpoint, African countries continue to search for policy mixes to help accelerate the achievement of these targets. However, for many countries, financing remains the biggest bottleneck with implementing capacity a close second,” it said.
The Report posits that to meet the SDGs Africa will need to raise an estimated 11 per cent of GDP per year for the next 10 years to close the financing gap.