Financing for development: A Pan-African perspective

The third international conference on Finance for Development (FfD3) started in the Ethiopian Capital Addis Ababa, on 13 July 2015 and ended on 16 July 2015. The global conference, the first on the African continent, attracted close to 5000 delegates from all over the world. Delegates included heads of state; ministers of finance, foreign affairs, and development cooperation; representatives of civil society organizations; and the business sector. This goes to demonstrate how the post-2015 Sustainable Development Goals are being taken seriously.

The choice of Addis as a venue for this phenomenal international conference was well justified: Addis Ababa is a very secure city and is home to major international organizations such as the AU and UNECA. It has excellent infrastructure and can clearly serve as a model of how finances put to good use can stimulate massive investments and urban development, as well as being a hub and meeting point for the greater Horn of Africa, within the large regional blocks of Eastern African Community (even though Ethiopia is not yet a member) and COMESA. All the major international hotels in Addis were awash with activities as side events were spread across the city: the Radison Blu Hotel, Hilton Hotel, Jupiter Hotel, Hotel Intercontinental, and so on.

What is the major scope of FfD3? The UN General Assembly resolutions (68/204 and 68/279) that specified the terms of reference of the conference identified three main areas of focus:

1. Assessing the progress made in the implementation of the Monterray Consensus and the Doha Declaration and identifying obstacles and constraints encountered in the achievement of the goals and objectives agreed therein, as well as actions and initiatives to overcome these constraints;

2. Addressing new and emerging issues, including in the context of the recent multilateral efforts to promote international development cooperation;

o the current evolving development cooperation landscape;
o the interrelationship of all sources of development finance;
o the synergies between financing objectives across the three dimensions of sustainable development; and
o the need to support the United Nations development agenda beyond 2015;

3. Reinvigorating and strengthening the financing for development follow-up process.

Come September 2015 the UN will hold a summit to agree on the sustainable development goals (SDGs) as a follow up to the post-2015 agenda. The narrative is along the lines of calling upon the global community to fight vulnerability and extreme poverty, while protecting the ecosystem that is our common home. There has never been such passion across the globe to end extreme poverty.

WHAT ARE THE MAIN ISSUES?

The immediate background to the FfD3 conference is the expiry of the MDGs in 2015. So the key issue is: how did the international community fare in meeting the MGDs? What worked and what did not work? The knowledge gained from the results of implementing the MDGs can help to polish up the next phase of Sustainable Development Goals, later this year.

Most observers of the MDGs point to the need to combine poverty eradication with the promotion of equality and equity. The yawning gap between the rich and the poor is scandalous. A good number of participants at the Addis Conference pointed out the fact that it is not resources that are lacking, but rather access and equity.

The emphasis on sustainability has brought to the discussion hitherto neglected issues in development discourse. The new issues that have been identified for the SDGs are as follows:

RURAL WATER AND SANITATION

SDG no. 6 is about the sustainable management of water and sanitation for all. It is in rural areas of Africa where clean water and sanitation are a major challenge. Millions of people still rely on water fetched from village streams. Some women spend a whole day collecting water. A common site in most African villages is that of women and children fetching water from the same streams where cattle drink. No wonder water-borne diseases are a major threat to most people in rural Africa. Governments rarely consider clean water and sanitation as an essential part of sustainable development. The African Development Bank has taken the issue of water very seriously by dedicating about $5 billion to water-related projects across Africa.

INVESTMENTS IN TRANSPORT INFRASTRUCTURE

It is common knowledge that transport infrastructure is key in easing the mobility of goods and people across the African continent. This is even more crucial given the many land-locked countries which are trapped in colonial boundaries. The benefits of globalization will remain a distant dream if transport infrastructure is not improved. Access to global and regional markets can only be made possible if road, water and air travel are well developed. Some of the obstacles to efficient transportation are self-inflicted, such when neighboring countries fail to harmonize border rules and procedures, thus creating bottlenecks on border posts.

Development corridors such as the Northern Corridor of the East African Community, comprising the countries of Uganda, Kenya, and Rwanda, create jobs, increase free movement of people and goods, and increase revenue generation for the respective countries.

QUALITY OF HIGHER EDUCATION AND SKILLS

Hitherto, governments across Africa have invested in universal primary education suggesting that literacy and numeracy are crucial to development. But this focus on primary education fails to appreciate the fact that just being able to read, write and count does not substantially increase one’s life skills. Key issues of health care, agricultural innovation, ICT, and even the ability to teach at primary and secondary levels, are intellectual skills only obtained at higher levels of education. To build capacity in local institutions, and to find indigenous solutions, one needs to have higher education. Human skills development is central to sustainable development in Africa, but Africa keeps looking for solutions from outside, an approach that is not sustainable.

In identifying sectors for financing, it should be made clear that some sectors will have a multiplier effect if funded sufficiently. Higher Education with gender equality is such a sector. It is those who have benefited from higher education who are able to engage in transformational change, both socially and politically. Educated mothers are more likely to ensure that their children are well educated as well. It is also educated women who are able to negotiate their reproductive rights and work for gender-equality policies.

Crucial to transformational change by universities is the role of innovation and research. Traditional colonial models of higher education will not bring about the desired sustainable development. New models of higher education using distance or e-learning need to be explored. Brain-drain has robbed Africa of many talented professors; but such talents in diaspora can also contribute to distance learning using online courses.

MODERNIZING AGRICULTURE: AGRO-ECOLOGY AND ETHNOBOTANY

Africa is still largely a subsistence-based economy with the majority of the population (close to 80%) relying on agriculture. And yet most countries assign less than 10% of their budget to agriculture. Modernizing agriculture will help improve crop yields and ensure food security.

Since sustainable development is the overriding concern, agriculture needs to be connected with ecology: hence agro-ecology and ethnobotany. This will help preserve biodiversity. Africa is home to thousands of rare plant species that are used for ethnomedicine. These need to be preserved and processed to isolate their curative elements. Along with agro-ecology and ethnobotany comes eco-tourism.

Financing smallholder farmers in rural Africa is crucial to sustainable development. The engines of food security across Africa are not the big commercial farmers, but the smallholder rural farmers. And in rural agriculture, financing should be given to women as the major actors in rural subsistence economy.

FINANCING FOR HEALTH

Next comes health. Only healthy citizens can combat poverty. MDGs were rightly biased towards health—reducing maternal and infant mortality, reducing HIV and AIDS infection. Improved agriculture, and quality education, are only possible if we have a healthy population.

DOMESTIC RESOURCE MOBILIZATION AND ENDING ILLICIT FINANCIAL FLOWS

What does domestic resource mobilization entail for Africa? It entails efficient fiscal and tax policies. Efficient revenue collection and utilization can go a long way to promote sustainable development. Where revenue authorities have been efficient in collecting taxes, and these taxes have been put to good use, countries are doing much better.

The other mechanism to raise domestic funds is through philanthropy. There are many African billionaires who can contribute to social development through philanthropy, but the culture of giving locally has to be instilled in people’s minds.

Illicit flows through tax evasion and blatant fraud across Africa undermine sustainable development. It is common knowledge that huge sums of foreign aid to Africa find their way into Western accounts. One cannot hope to eradicate poverty with such illicit final flows in Africa.

NON-TRADITIONAL FORMS OF FINANCING: FAITH-BASED BANKS

As the global community continues to search for innovative ways to end global poverty, it might be helpful to look at non-traditional ways of financing such as faith-based banking. Islamic banking is an area worth exploring, where the principle of zero interest rates is practiced. There is also the innovative Centenary Bank in Uganda run by the Catholic Church, which gives loans for education and agriculture. This bank has inspired a lot of trust among its customers and if its model was replicated in the rest of Sub-saharan Africa, it might bring about a financial revolution in a continent where the percentage of the population with bank accounts is still less than 30%.

CONCLUSION

The deadline for MDGs ends this year, and the global community is set to come up with SDGs in September at another UN summit in New York. The Addis Ababa 3rd International conference on Finance for Development has laid a foundation for further conversation on how to end extreme poverty. Will the SDGs be another list of goals for the next 15 years? While the international community should show more commitment this time around, Africa also has a responsibility to own the process and contribute to meeting the post-2015 agenda.

The critical areas that need urgent attention were spelled out: modernization of agriculture, higher education, non-traditional forms of financing, financing for health, domestic resource mobilization, investing in transport infrastructure, and rural water and sanitation.

For this to succeed we require political will on the part of global leaders and African heads of state. But there is also a need to solicit the support of the private sector, civil society organizations, and faith-based organizations. And as speaker after speaker at the Addis FfD3 international conference insisted, “SDGs are not aspirational, but achievable.”

* Odomaro Mubangizi (PhD) teaches philosophy and theology at the Institute of Philosophy and Theology in Addis, where he is also Dean of the Department of Philosophy.

* THE VIEWS OF THE ABOVE ARTICLE ARE THOSE OF THE AUTHOR AND DO NOT NECESSARILY REFLECT THE VIEWS OF THE PAMBAZUKA NEWS EDITORIAL TEAM

* BROUGHT TO YOU BY PAMBAZUKA NEWS

* Please do not take Pambazuka for granted! Become a Friend of Pambazuka and make a donation NOW to help keep Pambazuka FREE and INDEPENDENT!

* Please send comments to editor[at]pambazuka[dot]org or comment online at Pambazuka News.