confidentially speaking
The Africa Confidential Blog
Mo Ibrahim Foundation charts way out of Africa’s finance fix
Blue Lines
In 2024, one in four developing economies is expected to remain poorer than it was on the eve of the pandemic in 2019, according to a report published on 19 June by the Mo Ibrahim foundation.
Many of the traditional means of finance are no longer viable. Both aid and the blended finance offered by donors via development finance institutions come with myriad conditionalities and too often reflect the policy priorities focus of the donors themselves.
Meanwhile, debt has become an impossible option, as Africa’s external debt has already tripled since 2009, and is available only at prohibitive interest rates. The AU reckons that mobilising the continent’s domestic resources can cover up to 90% of the financing required for its Agenda 2063. This means cutting illicit financial flows and strengthening tax systems, sovereign funds and pension funds. The Africa group at the UN General Assembly is drawing up the terms for a new UN tax convention.
Governments will have to monetise Africa’s critical minerals which the world needs for the green transition. Pascal Lamy, the former director general of the WTO, told Africa Confidential that governments should take advantage of financial instruments that reward countries for protecting biodiversity and markets which offer debt relief in exchange for environmental protection. ‘The money is there’, concludes the report. The question is how to access and redirect it.