This article was created with support from uneca
In an interactive session with representatives in the expert segment of the African Finance Ministers' Conference on Addis Ababa, ECA Executive Director Claver Gatete shows that the disruption in global trade policy and the withdrawal of aid and concessional finances is time for Africa to look inwards and have grown solutions at home.
“Aidance is declining, and as Africans we may forget that and focus on trade and investment. We must look inwards and see what we can do differently as intra-African trade remains the same for decades,” Gattete said.
He said there are many new players who will help plug infrastructure and other funding gaps, including funding in India and the Middle East.
However, the playing field is not level, he said he cites the fact that IMF shareholdings across the continent are comparable to that of Germany. “Why is that fair?”
Gatte stressed the need for Africa to take a different internal approach, even if Africa fights for fair dealing with the international community.
He highlighted the transition to private sector-led growth, urging policymakers to rule out key sectors at risk and improve the business environment.
He called for expanded efforts to promote the mobilization of domestic resources, noting that African countries must reform their tax systems to reduce their dependence on aid and promote their own development.
“Why are we at 15.6% of GDP in terms of taxes? This is too low. Some of our countries are below 10% of GDP. This is not acceptable to any standard. To be competitive, we must be at least 25%.
Gatete lamented the fact that there are two investment grade countries throughout Africa. “We need to work together and know what's going wrong.”
He added that rating agencies are a problem for Africa as their work is driving up the much-needed cost of capital, but still do not understand the work of African countries.
