Partnerships and financing. Issue 16

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Charles Abugre Akelyira outlines a new form of global partnership in which Africans can drive the post-2015 development agenda for themselves

Unlike the Millennium Development Goals (MDGs) that were literally imposed as part of the aid compact, African governments, organized under the African Union (AU), have been proactive in fronting their priorities for a post-2015 development agenda. The Common African Position (CAP) agreed by heads of state and government in January 2014, proposes six priority pillars for the new development agenda. These are: ● structural economic transformation and inclusive growth that provides employment, food self-sufficiency and addresses inequalities; ● science, technology and innovation to drive economic progress; ● people-centred development that aims at zero extreme poverty, addresses inequalities, and provides equitable access to basic social services, while underpinned by good governance; ● environmental sustainability including, responding to climate change; ● peace and security achieved through conflict prevention and tackling the rootcauses; ● finance and international partnerships, emphasizing domestic resources mobilization and rooted in principles of solidarity and mutual interests.

The scale of the resources needed

Although African governments have not yet estimated the scale of resources needed to achieve the post-2015 goals as outlined in the CAP, undoubtedly these will be extensive.

Sectoral estimates generated by the United Nations suggest additional financing needs for developing countries in excess of

FINANCING AFRICA’S POST-2015 DEVELOPMENT TRANSFORMATION US$1trn annually. To finance Africa’s crossborder infrastructure needs (energy, water, telecommunications and transportation) alone,the Programme of Infrastructure Development in Africa (PIDA) estimates a minimum of US$360bn. Add other infrastructure needs for rural development and public service delivery, and the investments needs could rise to US$100bn annually. Add the cost of human resources, social protection, and adaptation to climate change, and we are looking at US$1trn annually. Factor in outflows and the net resources would be even bigger.

Such volumes of resources cannot be realistically met by external capital inflows alone. This accounts for the CAP’s emphasis on economic transformation as the key driver of growth, savings, investment and taxation.

Structural transformation

Even though Africa’s GDP has expanded, multiplying nearly five-fold compared to 2000 figures, amounting to about US$2trn, due to economic growth and the re-basing of GDP calculations, this is still smaller than

the United Kingdom’s economy. With a savings rate of about 17%, the volume of resources that can be derived for investments plus debt servicing is less than the GDP of South Africa.

The logic for prioritizing structural economic transformation in the CAP is that sustainable development financing is ultimately based on a capable economy from which healthy savings, investments, consumption and tax revenues are derived to fuel growth, deliver services and reduce inequalities. In Africa, this will require altering the structure of economies to reduce dependency on primary commodities, increase the share of manufacturing in GDP, and increase productivity in small-scale agriculture and value-added services.

The structural transformation agenda also hopes to alleviate the enduring impacts of the roughly 1,000 Structural Adjustment Programmes (SAPs) imposed on the continent, which prioritized among others, the export of raw materials, and a slim state that plays no active role in the productive sectors of the economy and saves money ➤

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