R/€ = 15.39
R/$ = 13.75
Au 1138.00 $/oz
Pt 910.00 $/oz
Sep 26, 2007
Africa must mobilise 'hidden' domestic resources for development - UNBack
© Reuse this African countries should become less reliant on overseas donor funding and move towards increased domestic resources to accelerate the continent’s economic growth, a United Nations (UN) agency said on Wednesday.
The UN Conference on Trade and Development (Unctad) head of the Special Coordinator in Africa Sam Gayi said at the launch of the ‘Economic Development in Africa’ report, in Johannesburg, that Africa could “claim ownership” of its development, if it had relied more on domestic financial resources.
Africa had potential financial sources that could, over time, significantly reduce the continent’s dependence on aid, and enable the countries to use the finances to fund their own priorities, rather than those of the overseas donors.
While some public finance reforms had been implemented to increase government revenue, the effect on State revenues had been limited.
Gayi suggested that countries needed to step up their efforts to boost local financial resources, and focus efforts on increased tax revenues, mobilising workers’ remittances, reforming the financial sector and tackle capital flights.
Many African countries have introduced value-added taxes, which raised government revenue to a limited extent without compensating for the revenue losses as a result of the reduction of trade taxes. But should countries improve their collection, revenues accrued from taxes could double in some countries.
Formalising the informal sector could also further boost tax revenues, which could be invested to sustain higher rates of economic growth.
Unctad stated that workers’ remittances were an important source of development finance, and that channelling more remittances through African countries’ formal banking systems could increase their development impact.
“Most remittances now spur consumption, but governments could encourage their greater use for investment,” the report suggested.
Capital flight also continued to deny African economies of large amounts of the continent’s resources for investment, and the agency urged Africa to stop the “financial haemorrhage”.
‘Developmental states’ to boost savings
Unctad also called for the establishment of what it described as a ‘developmental state’ to accelerate economic growth.
Developmental States had a much greater intention of increasing and retaining domestic financial resources, and had resulted in phenomenal growth for several Asian economies.
Developmental States have also underpinned the immediate post-colonial development of several African countries, and this could re-emerge in Africa, Gayi said.
Gabon, a West Central African country, was the one of the world’s fastest growing developing countries up to 1975.
Developmental States would enable African governments to use domestic resources and allow them to encourage long-term productive investment.
But, for developmental states to be successful, countries had to reduce their dependency on external funding, and deepen current improvements in governance, Gayi said.
A successful developmental State was one that creates institutions that genuinely address development challenges, but the report warned that there was “no magic formula”.
“Building such institutions is a learning-by-doing process, adjustable and flexible enough to allow even for the possibility of failure. True ownership means allowing sufficient policy space to undertake such a learning process, leading to robust institutions to push development forward,” Uctad stated.
Edited by: Liezel Hill© Reuse this Comment Guidelines (150 word limit)
Recent Research Reports
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
This Week's Magazine
Energy analyst and EE Publishers MD Chris Yelland warned recently against excessive optimism regarding timescales for the proposed construction of new nuclear power plants (NPPs) in South Africa. He was speaking at a Nuclear Roundtable in Johannesburg. “I think we...
Malawi’s Lilongwe Water Board (LWB) is inviting eligible bidders to prequalify for the board’s efficiency improvement works, which will be implemented as part of the E24-million Lilongwe Water Resources Efficiency Programme. LWB CEO Alfonso Chikuni explains that...
CROATIA, AN EU MEMBER BUT NOT A TDCA MEMBER On July 1, 2013, Croatia officially became the twenty-eighth member of the European Union (EU). Despite Croatia’s accession into the EU, it is yet to become party to the Trade, Development and Cooperation Agreement (TDCA)...
The Council for Scientific and Industrial Research (CSIR) has announced that its new Inundu airborne electronics testing, evaluation and training pod had made its first test flight on September 10. The successful flight was undertaken from Lanseria International...
The Development Bank of Southern Africa (DBSA) – which disbursed a record R13-billion during 2015, from R12.7-billion in the prior year – remained optimistic that it could ramp-up loan disbursements to R25-billion a year by 2018 as it sought to give greater emphasis...