–The following is an extract from the Unlocking Investment and Finance in Emerging Markets and Developing Economies (EMDEs) World Bank program
—Building Robust Financial Markets and Institutions in EMDEs presented by Dr. K.Y. Amoako
You know that to me the SDGs it is imperative for Africa to maintain a sharp focus on economic transformation. By sub Saharan Africa would have a larger and younger work force than China or India. This together with the continents of abandoned land and natural resources can be harnessed on rare conditions for economic transformation. Already we have seen impressive economic growth in many African countries than s. Coupled with the improvements in governance and investor confidence these trends support projects for better jobs sustainable growth and shared prosperity.
So African countries must do more to leverage their growth in sustainable development policies and plans that focus. For instance on increasing productivity in agriculture developing strong manufacturing industries and boosting reading the integration and treat. Africa needs more than economic growth to sustain its recent progress on the embrace opportunities in these transformation. I would believe that African countries can transform by diversifying their production and exports and boosting their competitiveness in world markets and increasing their share of manufacturing in GDPs.
These measures along with others will boost prosperity reduce dependence on foreign assistance and increase resilience to shocks. Finance in Africa’s transmission would be a challenge. But you can do that with international developmental landscape changing and their shift from MDGs to the more comprehensive SDGs. Africa nations will have to reform more financial resources domestically than ever before. For example Africa will need to fund to percent of its infrastructure development from domestic resources. And most African countries are beginning to rise to the challenge.
According to the African bank Official Development Assistance (ODA) exceeds the measures in resources only twelve African countries. Yet why this is indeed not worthy? So much more can be done. Particularly in the area of tax administration. Despite improvements in recent years Africa’s tax revenues are said the lowest of any region. The current tax base is narrow inefficient and highly vulnerable to corruption. Revenue losses from illicit financial flows can amount to $ billions per year.
These resources could go a long way with the appropriate tax reform schemes to tap taxes from informal sector as a way of mobilizing the funds for development. Up to an addition of $ billions annually between now and will be needed to reduce poverty by half. To me this demand will require an overall of the current taxation structures in most Sub-Saharan and African countries where tax bases are narrow taxes are barely progressive exemptions are widespread the capacity of tax administration is weak and there is a preponderance of hard-to-tax economic activities because of the large informal sector. These features together creates room for tax evasion.
One promising source of tax revenue is property taxation which is very very poorly developed in Africa. Another is increase in the pace of formalized in Africa’s huge and very active informal sector. Taxation from natural resources can also be optimized along with developing a system to track or measure mobile and other digital money transfers which could yield considerable revenue. Furthermore African countries should reexamine the value of tax incentives and exemptions which greatly reduce tax revenues.
Some eighty percent of countries rely on tax qualities to attract foreign investment. But government should consider that many of these investors would have set up their operations even without such incentives. Encouragingly initiatives to utilize technology in tax collection has led to both higher revenues and greater compliance. Local capital markets are becoming a significant source of finance in some African countries as well. Ghana for example raise a $196 million on the back of a five year local bond with considerable resources flowing from the private sector to fund infrastructure projects run as well has initiated the I guys zero development fund in addition to pension and insurance funds to support the finance sector. On the line E. challenge two economic transmission in Africa is a deeper and marginal issue.
How to establish a strategic relationship between government and the private sector factors that makes it possible to address these problems without repeating the errors that deviate the transformation of investors in the past? In a giant paper we do with the Overseas Development Institute (ODI) on public and private sector collaboration for economic transformation. We find several actions that can strengthen private-public collaboration for transformation.
First building a shared vision of economic transformation that has a bye in the politicians the private sector and not the citizen. Second put in place a strong agency that can effectively coordinate the governments’ role. Third ensuring public agencies develop formal and the informal networks and information-sharing platforms with the private sector that offers them incentives for collective action. Fourth encouraging mutually and for several performance standards by promoting behavioral and productivity changes.
Over a certain periods of time in these terms of sectors that are technically assessed as promising for economic transformation. And fifth build an effective process of feedback and learning into the public-private collaboration. Finally supporting climate transmission in Africa requires working at three levels. At the African continental level to set the transformation agenda and vision. At the country level with governments the private sector and other stakeholders to chart a transformation course and set priorities on key issues. And at the institutional level to engage policymakers to build capacity and strengthen the institutions start with implementing transformation agenda. Actions on all these fronts are key. Their combined impacts has the potential to transform Africa lifting hundreds millions out of poverty. I’m pleased in Africa family on the tragectory on shared and sustainable prosperity as envisioned by the SDGs.