Briefieng Note: Implementing African Development Initiatives:

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Publication Date: 
01 June 2016
Author: 
Sahra El Fassi and Faten Aggad
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Introduction

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.

But as the Agenda 2063 document asks, “what strategies should Africa pursue to encourage domestic resource mobilization 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. For example, when the New Partnership for Africa’s Development (NEPAD) was launched, it was welcomed from all quarters. It was meant to provide a guiding framework that would shape the agenda for the continent’s development for years to follow. Quickly however, enthusiasm dwindled as the initiative faced financial and strategic challenges that would hinder its implementation. Among the several stumbling blocks faced by NEPAD before it underwent reform in 2010 was its inability to raise funds domestically to leverage external support. As a result, progress with implementation depended on the availability of external resources. As noted by a 2007 paper by the United Nations Economic Commission for Africa (UNECA), this situation dis-incentivised countries that relied on external funding from implementing NEPAD programs which were not aligned with what was funded. The paper noted that “[this] situation creates an incentive problem for the implementation of NEPAD, further complicated by the fact that some programmes in RECs and member States are financed by external donors whose priorities differ from NEPAD’s, or who are already committed to other kinds of projects, or have not yet shifted under emerging policies. In such circumstances, NEPAD priorities are likely to take a back seat to those of the sponsors.”  As Africa readies to launch the ambitious framework that Agenda 2063 is, there is recognition at different levels that there is a need to address the financing question and provide more independence in the choice of priorities.

As a result, a number of initiatives were launched to promote a reflection on how Africa, its States and financial institutions can finance the continent’s development. Several studies on the available pools of funding have been undertaken, notably by the AU’s NEPAD Planning and Implementation Agency (NPCA), the United Nations Economic Commission for Africa (UNECA), the African Development Bank (AfDB), the High Level Panel on Alternative Sources of Financing the African Union chaired by H.E. Olusegun Obasanjo and the Mbeki High Level Panel on Illicit Financial Flows (IFF) that operates with the technical support of UNECA and the AUC.

The studies show significant progress on Africa’s own reflections on how it can generate alternative sources of financing its development. They provide a base for further reflection by identifying the different possible domestic sources, which could be tapped into to raise new funding and help achieve greater financial independence from international resources such, as donor funding.

To help translate these potential sources into arteries of funding in concrete terms, further reflection is needed. Besides an African Development Bank (AfDB) study on the use of foreign reserves to bridge the infrastructure financing gap or another by the World Bank and the AfDB on the need to transform Africa’s Infrastructure , most studies do not go far enough in addressing the fundamental factors that drive stakeholders’ (un)willingness to contribute resources they control to regional or continental initiatives.

This issues paper 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.

Given the complexity of such issues and the brevity of this paper, it should be understood in its aim to give an inducement to more in-depth thinking and discussions. The paper is also limited by the fact that the Action Plans that would operationalise the Agenda 2063 are not yet ready to allow for a more specific discussion geared towards identifying opportunities ex ante. Nonetheless, the paper notes that there are several past experiences on the continent which can provide valuable insights into the question of financing beyond a narrow focus on resources i.e. looking at how processes incentivise or dis-incentivise financing. Under that perspective a follow-up note will be developed looking more in detail into implementation efforts of existing continental strategies – some of which are used in this paper for illustrative purposes – in order to isolate some of the key incentives and disincentives that drive commitment to financing.