African countries will require an additional $638 billion yearly to attain the Sustainable Development Goals (SDGs). The goals have 11 more years to go.
Meanwhile, some countries are falling into debt distress.
World leaders in 2015 adopted the 17 SDGs of the 2030 Agenda for Sustainable Goals, which came into force on January 1, 2016. The new Goals apply universally to countries and they are expected to mobilise to work towards ending all forms of poverty, end inequalities, tackle climate change, provide good health services, education for all, zero hunger and provide clean water and sanitation for all among others. It is also aimed at not leaving anyone behind.
But the need for African countries together to raise the estimated amount to fulfill the Goals, highlights the glaring gap that cannot be filled with the trends in public revenues, savings and investment, United Nations Economic Commission for Africa (UNECA) Executive Secretary, Vera Songwe, said at the opening of the experts meeting at the 52nd session of the Conference of African Ministers of Finance, Planning and Economic Development, being held in Marrakech, Kingdom of Morocco from March 20 to 26.
According to Songwe, the potential of Africa is, and has always been, promising. “With a growing working-age population; abundant arable land and a multitude of other resources, the continent has all the pre-requisites for rapid economic transformation in the next decade,” she said.
She, however, pointed out that ensuring the availability of adequate public resources and quality investments to drive structural change requires responsive policies that promote fiscal sustainability, optimise returns from economic activity, and enable economies to fully participate in an increasingly interconnected and globalised world.
”Rising global demand, increased commodity prices, investment and private consumption have moderately driven the rebound from the poor growth results of about 2.5 per cent in 2016 to the current rate of 3.2 per cent.
However, the medium-term outlook of between three and four per cent for Africa is insufficient to stimulate quality investments that will generate jobs and accelerate inclusive growth. To do so, Africa needs to triple its current growth rate, meaning investment must increase by between five to 10 per cent of GDP in order to achieve the SDGs,” she said.
She added: “This is more poignant, especially given rising populations, an increasing culture of protectionism in global trade markets; and the sluggish growth of manufacturing – a key sector in the transformation process.
“Also, as you are aware, it has been estimated that financing the SDGs will require an additional $638 billion annually, highlighting the glaring gap that cannot be filled with the current trends in public revenues, savings and investment.”
Songwe noted that as a result, African countries are already observing the financial pressure on governments as they seek to close this gap through external financing.
“The number of countries at high risk of debt distress – 18 in all – has more than doubled since 2013, while eight countries are already in distress.
“If this pace continues there is a high risk of eroding the substantial progress made in reversing the high trend of indebtedness in African countries experienced at the beginning of this century,” she warned.
She also said, between 2000 and last year, Africa had the lowest average ratio of government revenue to GDP of any region in the world at 24.5 per cent, compared to Latin America, for example, at 27.8 per cent., adding that, this is not due to lack of effort as over the last two decades, the number of African countries, which have tax-to-GDP ratios under 15 per cent fell by half–a significant achievement.
“Despite widespread tax reforms in Africa, results have been mixed largely due to structural factors such as informality, low per capita income and very small initial base of manufacturing and modern services.
By addressing capacity tax constraints, Africa could boost tax revenues by three per cent of GDP. In addition, by better aligning tax rates and revenue with business cycles, African countries can boost government revenue as a share of GDP by five per cent,” she said.
She noted further that, with just over a decade remaining to achieve the goals set out in Agenda 2030, it is imperative that the scope and mechanisms of domestic resource mobilisation be revolutionised to bridge the financing gap, promote macro-economic stability and limit costly external borrowing.
