R/€ = 14.28
R/$ = 10.36
Au 1236.51 $/oz
Pt 1375.00 $/oz
Sep 26, 2007
Africa must mobilise 'hidden' domestic resources for development - UNBack
Johannesburg|Africa|Gabon|Development Finance|Formal Banking Systems|Public Finance Reforms|United Nations|Uctad|Unctad
© 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
Updated 40 minutes ago Independent renewable-energy company Mainstream Renewable Power, which is in the process of developing a sizeable South African portfolio, has launched a new capital-raising unit designed to secure competitive financing for wind and solar projects. Known as...
Updated 1 hour 41 minutes ago The African Development Bank Group (AfDB) has approved two grants and a loan, worth a total of $105.3-million, to finance the Lovua-Tshikapa section of the Batshamba-Tshikapa road project, in the Democratic Republic of Congo. The project would aim to provide access...
Updated 2 hours 28 minutes ago The Independent Communications Authority of South Africa (Icasa) this week said the access-line deficit (ALD) – the gap between the insufficient revenue generated from line rental against the cost of building and maintaining the access network – was of “no...
Recent Research Reports
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 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 network, the funding and maintenance of these respective networks, and the push to move...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
Projects in Progress - Second Edition (PDF Report)
Creamer Media’s second Projects in Progress supplement considers some of the major project developments under way, including high-profile energy and transport projects, as well as a few of the lower-profile public and private developments. What remains apparent is...
Water 2013: A review of South Africa’s water sector (PDF Report)
Creamer Media’s Water 2013 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Canadian Mining Roundup for June 2013 (PDF Report)
The June 2013 roundup includes details of the development of TSX-V-listed Aldridge Minerals’ flagship Yenipazar polymetallic project, in Turkey; the Canadian Nuclear Safety Commission’s renewal of Cameco’s uranium mining licence pertaining to the Cigar Lake...
This Week's Magazine
Mitsubishi Motors South Africa (MMSA) has introduced a 4x2 derivative of its Pajero Sport sports-utility vehicle (SUV), which will give it access to a substantial slice of the full-size SUV market, where it will compete with the likes of the Ford Everest, Chevrolet...
South African Energy Minister Ben Martins has affirmed that the government wants the country to be globally competitive in the nuclear sector. "Our responsibility has always been ... to ensure that, in nuclear energy, South Africa can compete with the rest of the...
Mercedes-Benz South Africa (MBSA) president and CEO Dr Martin Zimmermann describes the new S-Class as “a special place to be”, with the car creating a sense of “wellness” once you are seated inside the German brand’s flagship model. It is difficult to argue...
Water scarcity and water-quality issues are broadly recognised and understood in most political, business and civil organisations in South Africa, but solving water issues will require wide and continuous action in catchments and municipalities by organisations and...
Work is well under way on the R212-million Imvutshane dam, 30 km north-west of Stanger, in KwaZulu-Natal, which is a key link in supplying people in rural Maphumulo with a reliable source of safe drinking water.