Development experts have warned that persistent poverty and inequality are likely to undermine prosperity, peace and security in Africa unless governments embark on innovative and people-entered development models.
“It is becoming increasingly unlikely that African States will achieve many of the targets set out in the Sustainable Development Goals by the 2030 deadline,” said Hanan Morsy, Deputy Executive Secretary and Chief Economist, Economic Commission for Africa (ECA). “Global shocks have wiped out more than two decades of progress the continent had made on poverty reduction. We need sustainable interventions.”
In light of this, the ECA hosted a round table discussion at the 55th Conference of African Ministers of Finance, Planning and Economic Development (COM 2023) for experts to brainstorm and recommend actions to help member states lessen their economic and social vulnerabilities and inequalities.
Harvesh Seegolam, Governor of the Bank of Mauritius, explained that when the COVID19 pandemic hit in 2020, his country’s tourism sector came to a halt. To mitigate the impact of the slowdown, the government came up with both conventional and unconventional measures. Key among them was to make the Mauritius Central Bank an independent institution.
“The government introduced moratoriums to support targeted sectors; introduced line up credit,” said Mr Seegolam, adding that the government also created the Mauritius Investment Cooperation, which operated independently from the central bank, and had independent audits to ensure money invested would benefit the bank.
The main objective of the Mauritius investment cooperation, he said, was to create more wealth for the future generation of the country. The intervention became profitable.
Ethiopian minister of finance, Ahmed Shide, said Ethiopia like any other African country was affected by overlapping shocks – Covid19, the Ukraine-Russia war, conflicts and drought – and that the country’s response included a combination of fiscal and monetary policies.
Precautionary measures, he said, were put in place to contain the Covid19. The government postponed personal income tax payment, rescheduled bank loan repayments, gave tax amnesty to different sectors, boosted local food production through the cultivation of more land, and boosted meat production. They also embarked on more irrigation activities, and expanded Ethiopian airline as well as digital payment systems to ease transactions.
The minister of finance and budget for Central African Republic, Hervé Ndoba, said the country has been facing fuel scarcity, high cost of transport for commodities mainly because it is a landlocked country.
“To address this challenges, the government created a dry port with warehouses for importers, put in place custom levies to limit import inflation. Specifically, the government created a custom base to leverage on production costs and adjusted the fuel pump prices,” said Mr Ndoba.
“We target to increase domestic product through community levies. Financial diversification is what we are working on – green funding, blue economy.”
According to the executive director of the Joint United Nations Programme on HIV/AIDS, Winnie Byanyima, the biggest challenge for Africa is access to financial services. Even before the Covid19 crisis, war in Ukraine, countries were borrowing at an interest rate of over eight per cent (8%), while the high income countries borrowed at lower rates of as low as one per cent (1%).
The high cost of borrowing, she said, is taking away Africa’s prospects of achieving SDGs. Also, the challenge of not being able to borrow in countries’ own currency points to how countries are being treated unequally on matters of access to affordable finances.
“Discussion on financing for Africa is important as we approach the SDG summit in September,” said Ms Byanyima, adding that there is need for countries to tackle the high cost of debts, connect financing with SDG achievement, push harder for Africa to have a seat at the G20 forum.
Acting Executive Secretary of the Economic Commission for Africa (ECA), Antonio Pedro, said Africa is falling further behind other global regions and now accounts for the largest share of the world’s poor due to increased poverty and inequalities. As a result, many African countries are facing declining revenues, rising debt stress and constrained fiscal space, all of which limit their capacity to respond to economic crises
He said partnerships are key in addressing the African challenges. “During the pandemic ECA worked with finance minister to find solutions to counter the effects of the pandemic in their respective sector, helped African countries access vaccines for its citizen,” noted Mr Pedro.