Implementing African development initiatives: Opportunities and challenges to securing alternative financing for the Agenda 2063

Highlights 

• There is recognition within Africa that the continent needs to tap into its own wealth to finance its development agendas, most notably the African Union’s Agenda 2063.

• Significant efforts have been made to map the untapped alternative sources of financing from within Africa. These show that significant resources could be raised from within Africa, enough to cover about 70% of the development financing needs.

• A range of issues related directly to financing (accessibility, feasibility, costs, etc.) need to be addressed. However, there is a need to take a step back and refocus the discussion around financing from a ‘demand-driven’ to a ‘supply-driven’ debate around the questions of incentives, political buy-in and ownership to be able to turn ‘potential’ sources into ‘accessible’ sources.

Background

There is recognition within Africa that the continent needs to tap into its own wealth to finance its development agendas, most notably the African Union’s Agenda 2063.

Significant efforts have been made to map the untapped alternative sources of financing from within Africa. These show that significant resources could be raised from within Africa, enough to cover about 70% of the development financing needs.

Purpose

But as the Agenda 2063 document asks, “what strategies should Africa pursue to encourage domestic resource mobilisation to finance its development?” In order to find viable means to implement the action plans of Agenda 2063 at country or regional level, it is crucial to look at the reasons for which past continental initiatives had limited success.

This Briefing Note first provides a mapping of Africa’s resources for development. In a second step it will question some of the assumptions associated with the discussion on financing. Indeed, the briefing note is written conscious of the fact that the mobilisation of funds alone is not the issue. While there is potential of financing, the real challenge lies in developing an institutional fabric and strong and trustworthy mechanisms that would allow the entities in charge to implement Agenda 2063 and its Action Plans, tapping into available funds and receive a return on their investment.

Findings

A range of issues related directly to financing (accessibility, feasibility, costs, etc.) need to be addressed. However, there is a need to take a step back and refocus the discussion around financing from a ‘demand-driven’ to a ‘supply-driven’ debate around the questions of incentives, political buy-in and ownership to be able to turn ‘potential’ sources into ‘accessible’ sources.

The African Union Commission (AUC), under the leadership of Madame Dlamini-Zuma, has put Africa’s responsibility for its own development back under the spotlight with the Agenda 2063. This new African development framework is meant to provide a vision of where Africa should be in 50 years. The vision will be implemented through consecutive 10-year Action Plans that are meant to provide more concrete guidance for the AU, Regional Economic Communities (RECs), African countries, the private sector as well as civil society. Several consultations have taken place in the run up to the formulation of the Agenda. These are captured in the draft document, which is most likely to be adopted at the African Union (AU) Summit in Addis Ababa in January 2015.