Savings and investments critical to development – Bawumia

The Vice President of the Republic of Ghana, Dr. Mahamudu Bawumia has stated that savings and investments by both individuals and governments, are important to building wealth and leveraging on the wealth to ensure rapid economic development in Africa.

Speaking at the Africa Sovereign Wealth Funds Summit organized in Accra, Dr. Bawumia observed that “It is clear that if we are going to move Africa beyond aid, we need the resources. The resources are not going to come from aid. Obviously, they are going to come from savings and investments.”

Citing the savings and investments culture in Singapore, one of countries with the biggest Sovereign Funds, Dr. Bawumia stated that “one of the biggest Sovereign Wealth Funds is Singapore. I don’t know what natural resources they have but they have a savings culture both by the population and by the government.”

The Vice President bemoaned Africa’s over reliance on natural resources and aid for development. He argued that the more sustainable means of raising wealth for Sovereign Wealth Funds is through savings and investments. He said “If we are really going to build a Sovereign Wealth Funds that are going to contribute to the transformation of the economy then, there has to be that savings culture and what that means for us, and many African countries, it means domestic revenue mobilization”

The Vice President also told participants at the summit that Africa’s reliance on aid and charity was no longer sustainable for three reasons.

He said “The idea of Africa Beyond Aid is one of economic independence. Even though the data shows that actual aid to Africa has fallen significantly, Africa still depends extensively on the world to support critical projects and its development. The situation is first, not sustainable and second, not acceptable for three reasons.

“First, charity is not sustainable in the long term. Sooner or later fatigue sets in and the realities of narrowing fiscal space for those who give will begin to set in. Second, there are enough resources on our continent to help us move forward and third, dependency on international donors and financiers also come down to playing by their rules and committing to their terms some of which may not be aligned to Africa’s specific development challenges”

Dr. Bawumia urged African countries to commit more resources to address the challenges across the continent by pulling more money from Africa. This, Vice President Bawumia believes, would allow Africa to select the partners it wants and set and negotiate priorities and terms Africa needs.

The Vice President called on participants to use this summit and subsequent summits to address the critical issue of financing infrastructure. He suggested that “One crucial issue I hope this edition of the summit as well as subsequent editions should address is the critical issue of financing infrastructure.”

Citing a World Bank Report to buttress his suggestion, Dr. Bawumia revealed that “A World Bank report revealed that closing the infrastructure quantity and quality gap in Africa relative to the best performances in the world could increase the growth of GDP per capita by 2.6% per year. And the cost of addressing Africa’s gap has been estimated at $90 billion per year for the next decade.”