The African Development Bank Group (AfDB) has launched Country Focus Reports designed to deepen policy dialogue on the macroeconomic performance and outlook of African countries and to act as an indispensable tool for policy makers, government and development partners.
The reports titled “Driving Africa’s Transformation: The Reform of the Global Financial Architecture”, which align with the theme of the 2024 African Economic Outlook report, give deeper country-by-country specific dynamics and insights.
The African Economic Outlook report, which is published each year, provides timely evidence and analysis on the continent’s growth, empowering African policymakers to make informed decisions.
Generally, growth performance and outlook vary across the 54 African countries of the report, reflecting differences in economic structure, commodity dependence, and policies.
A news report circulated on behalf of the development finance institution by the African Press Organisation (APO) group, indicated that the 2024 reports assessed the experiences of each country in accessing finance necessary to fund their structural transformation and call for an overhaul of the global financial architecture to help turn around African economies.
Commenting on the reports’ findings, AfDB’s Chief Economist & Vice President for Economic Governance and Knowledge Management, Prof. Kevin Urama, said: “The reports make bold recommendations for financing structural transformation at country level through reforms of the global financial architecture to better respond to African countries’ growing development financing needs, exacerbated by recurrent global and domestic shocks.”
All 54 reports document funding needs and gaps as well as inadequacies of the current global financial system in supporting Africa’s structural transformation up to 2063.
Specifically, the reports made recommendations across five key areas, namely Leveraging Private Sector Financing, Ramping up climate finance, Reforming Multilateral Development Banks (MDBs), Reforming debt resolution mechanisms; and Enhancing domestic resource mobilization.
On the imperative of leveraging private sector financing to boost growth in the various countries, the reports maintained that “the private sector will remain a key partner in financing African economies. Countries need allow greater private sector participation in the economy to complement public investments, particularly in areas with high social returns such as climate action and human capital development.”
Similarly, on climate change financing, the reports recommended that since African countries contribute the least to climate crisis but are the most affected, “reforming the global climate finance architecture to strengthen coordination and facilitate access for African countries to climate finance will be key.”
This is even as they canvassed the need for multilateral development banks to revise their business models to provide long-term concessional financing at scale to African countries as well as bolster their capital positions, work on re-channeling a portion of the International Monetary Fund’s Special Drawing Rights (SDRs) and ensuring that countries with the most need get the most funding.
On debt management option, the reports noted that the existing debt resolution mechanisms such as the G20 Framework were not very responsive to the needs of African countries that need them, and recommend radical reforms for speedy debt workouts and sustainable debt management, including innovative market-based solutions, debt relief for climate action, and sovereign debt authority systems.
To enhance domestic resource mobilization for development, the reports called upon African countries to look inwards as they seek to finance their structural transformation, adding that the importance of strengthening domestic revenue mobilization through improved tax policies, enhancing efficiency in government revenue collection and utilization, combating illicit financial flows and tax avoidance, and leveraging Africa’s abundant natural resources will remain key.
In summary, the reports contained pragmatic policies ( short, medium and long-term) to accelerate African countries’ economic growth and structural transformation, and also provide governments and potential investors with up-to-date, accurate data to inform policy and investment decisions.
