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Addressing the barriers to domestic resource mobilisation in Africa The Africa Progress Panel Supports efforts to put Africa’s development at the heart of the global agenda Draws attention to specific opportunities and challenges; encourages timely action Tracks commitments by Africa and its partners to support progress Progress in Africa since Monterrey Major increase in development finance Domestic resource mobilisation is a success story Foreign direct investment, remittance flows and Official Development Aid - all up Maintenance/increase of domestic revenues: the key to sustained growth & development Source: IMF, World Bank & OECD as published in ‘ Development Finance in Africa ’ prepared by the Africa Partnership Forum, 2008 The global economic slowdown is affecting progress in Africa Commodity prices and trade levels down Remittance flows down as diaspora affected FDI in doubt as investors seek ‘safety’ Credit: cost up, availability down Economic activity and jobs affected ODA under pressure lower revenue/GDP (%); reduced GDP growth Domestic resource mobilisation threatened The crisis has underscored Africa’s vulnerabilities to external shocks Consumer demand: Asia, Europe, America Price of fuel, and commodities Financial governance in OECD countries Jobs, food security, public investment and progress on MDGs directly affected Constraints to economic growth Power and energy supply Infrastructure inadequate, not maintained, inefficiently used Management and implementation capacity Dependance on primary commodities Human resource potential untapped 375 Raising investment in infrastructure… Number of days on which businesses suffer at least one power outage 300 225 150 0 Namibia Mauritius Botswana Mali Lesotho China Swaziland South Africa Senegal Guinea Bissau Zambia Mauritania Burkina Faso Niger Malawi Benin Madagascar Kenya Angola Cameroon Mozambique Cape Verde Burundi Tanzania Rwanda India Uganda Congo, DR Guinea Gambia Nigeria 75 Source: Ramachandran et al (forthcoming Center for Global Development, 2009), calculated from World Bank Enterprise Surveys. China S. Africa Angola Congo DR Burundi Cape Verde Botswana Uganda Mauritania Tanzania Guinea Kenya Swaziland Lesotho Zambia Namibia Rwanda Malawi Cameroon Mauritius GuineaBissau Mali Mozambique Benin Burkina Faso Senegal Gambia Madagascar Niger Energy as a share of total cost of business 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Source: Ramachandran et al (forthcoming Center for Global Development, 2009), calculated from World Bank Enterprise Surveys. Businesses rank transport as a major or severe constraint 90 80 70 60 50 Large 40 SME 30 20 Source: Ramachandran et al (forthcoming Center for Global Development, 2009), calculated from World Bank Enterprise Surveys. Angola BurkinaFaso Kenya Benin Malawi Rwanda Senegal Uganda Mozambique Gambia Cameroon Nigeria Madagascar Zambia Swaziland Mali Congo DR China Lesotho Namibia Tanzania Botswana Burundi India 0 Mauritius 10 SouthAfrica p e r c e n t a g e Investing in people Commitments to tertiary education – risen recently, but after substantial decline Source: World Bank, 2008 Sustaining domestic revenues: transformational actions New, upgraded and better use of infrastructure Investment in sustainable energy generation Output and performance based management of public services – reduce costs, improve efficiency Unblock local and regional barriers to trade Improve investment climate and market ‘real economy’ opportunities in Africa Upgrade investment in people: especially education and women’s empowerment How partners can assist domestic resource mobilisation Better, more equitable global financial and economic governance International action to combat tax evasion Successful pursuit of the Doha round Promote innovative financing Political support from OECD Finance Ministers to meet aid commitments more predictable and effective use of ODA ODA Modest relative to other development flows Affected as GNI in OECD countries levels off, political pressure on budgets increases Can be used to leverage/boost other flows … and strengthen national capacities, eg for trade, revenue collection systems, attract investment, etc Efficiency and predictability must be greatly improved Conclusions Domestic revenues the basis for sustained growth and MDG achievement Actions required by LDCs clear International partners must do more to support both short term and longer term measures
