Africa’s funds too often dormant or misused, reports Mo Ibrahim Foundation

The Foundation says that Africa could do much better in using the financial resources at its disposable to achieve development outcomes.

June 21st, 2024 ByLuke Kilian

Africa must put in place new processes to allocate “dormant or misused” funds in order to meet the Sustainable Development Goals by 2030 and the African Union’s Agenda 2063, argues a new report from the Mo Ibrahim Foundation.

While the annual cost of achieving the SDGs and the African Union’s Agenda 2063 in Africa is estimated by various sources at between $870bn and $1.3 trillion, Africa’s four main sources of finance (revenues, personal remittances, official development assistance and foreign direct investment) amounted to just $829.7bn in 2022, the Foundation reports.

However, the report argues that resources mostly exist, but either lack the relevant processes to be effectively allocated or are either dormant or misused.

Mo Ibrahim, the Sudanese-British telecoms billionaire who chairs the foundation, said that Africa must overhaul its processes to ensure money is getting to where it is needed.

“We need a complete change of paradigm. This is not about Africa coming to the developed world with a begging bowl and developed countries considering how much more they can pledge. This is about smarter money, not just more money. As this report outlines, the money is already there. But current processes prevent resources from being used to properly address the challenges.”

“What I hope this report will show…is that the money is there, but mainly stuck in pipes, or misused.”

That echoes arguments made by the African Union. Domestic resource mobilisation could cover 75-90% of the financing needs for Agenda 2063 on average per country, according to the African Union.

“The money to finance Africa’s future is right here on the continent and within the global African diaspora. It lies in our natural resources, our people, and our innovations,” says Nardos Bekele-Thomas, CEO of African Union Development Agency.

The issue, however, is that the resources are not being used and remain dormant. Issues highlighted by the report include illicit financial flows (IFFs) – which cost Africa an estimated $100bn a year – and weak tax systems.

The money raised from ending IFFs could surpass both ODA received ($81bn annually) and remittances sent back to the continent ($97bn annually).

On taxes, Africa has the lowest government revenue in the world. In 2024, only 5 countries comprise over half (53.7%) of total Africa’s revenues: South Africa, Algeria, Egypt, Morocco and Nigeria.

“With the average tax-to-GDP ratio in Africa still at 15.6%, half the OECD average, strengthening tax systems appears a quick win. Indeed, Africa lost $46 billion in corporate taxes due to tax incentives in 2019, more than half of ODA received,” the Foundation says.
Debt not the answer

Africa’s total external public debt has almost tripled since 2009, rising from $220bn to $655bn in 2022. This is the highest public debt stock Africa has had in over a decade. Countries have had to cut essential public spending, diverting development funds to debt servicing.

“Debt cannot be the way out, as stock and servicing costs have tripled since 2009, and its increasingly complex structure renders traditional relief efforts obsolete,” the report finds.

Arkebe Oqubay, former senior minister and special adviser to the prime minister of Ethiopia and a contributor to the report, says that debt cancellation must be high up the agenda.

“Debt cancellation and restructuring should be the core solution to address the debt stress and financial pressure in African countries. It is of the utmost urgency to establish new financing mechanisms for African development.”
Utilising Africa’s resources

With the ongoing green revolution, Africa’s mineral reserves are in high demand as they are critical for renewable energy and low-carbon technologies. The report suggests that for the continent to make the most of this, it will have to not just produce raw materials but manufacture, design and refine them, in order to access higher value chains. More than 70% of the world’s cobalt is produced in DR Congo, yet Chinese companies account for 68% of the global cobalt refining capacity. Around 80% of the DR Congo’s cobalt output is owned by Chinese companies which produce higher value products such as batteries.

Another way to unlock more money is through Africa’s carbon-sinking capacity, according to the report. The Congo Basin forest offsets more than the whole African continent’s annual emissions. According to the African Carbon Markets Initiative (ACMI), Africa only uses 2% of its annual carbon credits and should aim to sell $100bn worth of credits a year by 2050.

Source, African Business, 21st June 2024


The Promise of Africa’s “Plan A” for a Flourishing Future

As Africa emerges as the world’s youngest continent, boasting six out of the 10 fastest-growing economies, the global community is taking notice of its unprecedented growth trajectory. In this context, YPO (Young Presidents Organization) member and Group CEO at ForAfrika, Isak Pretorius passionately advocates for embracing Africa’s inherent potential through a profound approach he calls “Investing in Africa’s Plan A.”

Pretorius asserts that when we engage with African communities and nations, we uncover an array of ingenious plans waiting to be supported and nurtured. Central to his advocacy is the importance of investing in Africa the right way, emphasizing that “when we do that, we will see that Africa’s plan succeeds.” This underscores the vital role of aligning resources with community-owned initiatives to foster sustainable success.
A Crucial Moment for Africa

Pretorius’s call to action resonates deeply with leaders worldwide, as they increasingly recognize Africa’s significance and potential for strategic investments.

According to the International Monetary Fund, many economies are grappling with stagnation or decline in working-age populations. In contrast, Africa is poised to become a major contributor to the global workforce by 2050. YPO member Yaw Benneh-Amponsah, Managing Director of Merson Capital in Ghana, emphasizes Africa’s evolving demographics, noting, “Africa’s population is growing. We are becoming a more educated population. We’re young and adventurous.”


This demographic evolution presents vast opportunities for Africa. Indeed, now is the time to chart a new course for Africa, one that secures its position and commands respect on the global stage
Embracing Africa’s “Plan A”

Against this exciting backdrop, Africans are coming up with their own versions of “Plan A” for the future. These aspirations hold the potential to usher in greater safety, peace and digital connectivity, noted Sanjay Rughani, CEO of Standard Chartered for Tanzania and YPO member, during YPO’s Global Impact Summit in Rwanda earlier this year. “It’s about becoming self-reliant,” he said.

Moreover, Africans are finding solutions in areas such as climate, infrastructure, energy and water management that have value beyond Africa’s borders. “Africa has its own fair share of challenges, and very often, we’ve had to find our own solutions to those challenges,” notes YPO member, Fola Laoye, Co-Founder and CEO at Iwosan Investments Limited in Nigeria. “It’s great that we have the opportunity to bring some of those solutions to the rest of the world.”
Empowering Africa’s Youth: Catalysts for Change

With high-quality traditional jobs in short supply, one critical foundation of any long-term plan for Africa’s future will be stopping the brain drain and giving young people a good reason to build their careers on the continent.

Entrepreneurship is an ideal way to do that, say many experts, and it’s already taking root organically. Young people looking for ways to make a living are driving the world’s highest rate of entrepreneurship, as the Brookings Institute notes in the Foresight Africa 2024 report.

Africa has gotten further ahead in technology than anticipated, and that factor, in combination with its youthful population, has been a powerful force, according to Laoye. “Small-scale businesses are finding the value of compounding and growing quite quickly with technology and therefore are bringing some tech-enabled solutions to the world,” says Laoye.
Taking Ownership of Africa’s Future

As Benneh-Amponsah asserts, “We should take ownership of our own plan and let that be plan A. Even if our plan is not as well-resourced as people from other jurisdictions, whatever resources we have, we should be able to risk those on our own plan. In shaping the future, the key thing is to believe in our own potential to take control of our future.”

The engagement of local leaders will also allow for better execution of any plans, Benneh-Amponsah believes. “The unique contribution that we can make is to bring our perspective to the table, which relates back to taking ownership of our progress because a lot of solutions fail since they are not sensitive to the context,” he said. “Who understands the African context better than those of us who are taking risks, risking our own resources on African solutions?” And, as leaders outside of Africa get involved in the progress that is already percolating, local leadership will be the key to building sustainable success.
YPO – Empowering Leaders to Shape a Better Future

Ultimately, it will take many leaders to craft a compelling vision for Africa’s future and come together to put it into action. To this end, YPO plays a pivotal role in this endeavor by empowering business leaders to shape a brighter tomorrow and harness the collective power of better leadership in lives, businesses and the world.

If you are interested in joining YPO’s global network of the world’s most influential business leaders driving positive change, visit or contact to learn more.

Source: The Africa Report, 28th May 2024


IMF projects improved growth for Africa but debt and limited taxes still prompt concern

he International Monetary Fund (IMF) projects that the continent’s economic growth will reach 3.5% in 2024 and 4% in 2025.

Some of the factors fuelling this optimism include the fact that inflation has almost halved, public debt ratios have broadly stabilised, and several countries have issued Eurobonds this year, ending a two-year hiatus from international markets.

“After peaking at almost 10% in late 2022, inflation has nearly halved to around 6% in the early part of the year thanks to decisive action by central banks,” Abebe Aemro Selassie, the director of the African department at the IMF, told reporters during the Fund’s spring meetings this April.

He emphasised that lower inflation has translated to slower food price increases, terming this as a “positive development” for a region where the cost-of-living crisis has been acute in recent years. “In addition, fiscal consolidation efforts are starting to pay off, with the median public debt stabilising at around 60% of GDP, halting a 10-year upward trend,” he observed.

Not out of the woods yet

“These are encouraging signs. But the region is not out of the woods yet,” cautions Selassie, citing concerns around high borrowing costs amid a crippling funding squeeze facing several countries on the continent. “Far too many countries still face a funding squeeze. Their borrowing costs are high, and funding sources curtailed. Government interest payments now account for about 12% of revenues, more than double the level a decade ago. And official development assistance has become scarcer.”

The impact of these challenges on Africa is significant. Rather than increasing investment in critical areas such as health, education, agriculture, and infrastructure – sectors that can drive development and lift millions out of poverty – governments are allocating essential funds toward debt servicing. This has implications for the region’s growth prospects and its ability to withstand future shocks, argues Selassie, who oversees the IMF’s operations and engagement with 45 countries across sub-Saharan Africa.

He believes that in the face of these challenges, governments in the region should prioritise domestic resource mobilisation, laying emphasis on tax policies that help governments cut their deficits. Specifically, he called for African countries to “cut back tax expenditures” that undermine equity. Tax expenditures are special provisions in the tax code – such as exclusions, deductions, deferrals, credits, and preferential tax rates – that benefit specific activities or groups of taxpayers. He also called for continued digitization of tax procedures to boost efficiency and transparency.

Getting African countries to pay more tax, while ensuring that the burden is equitably shared and economic stability and growth are not compromised in the process, will be key in bolstering Africa’s efforts to reduce its unhealthy reliance on international debt markets.

Many African countries receive a much lower proportion of their GDP in tax than do countries on other continents, according to a report by the Organisation for Co-operation and Economic Development (OECD). The report, which covers tax revenue data for 30 African countries between 1990 and 2018, shows that the average tax-to-GDP ratio for the 30 African countries was 16.5% in 2018. This compared with an average of 34.3% in the 38 OECD member states; and 23.1% for the Latin American and Caribbean nations.

Calls for global financial architecture reform grow louder

Africa’s challenge in collecting sufficient taxes partly stems from international firms exploiting loopholes in the global taxation system to evade paying taxes on the continent, leading African countries to an unhealthy reliance on international debt markets.

“A new global tax system attentive to the needs of the global south is a key priority,” notes Brahima Coulibaly, vice president and director of global economy and development, Brookings Institution. There are positive signs that the global taxation system is moving toward greater equity. Last year, an Africa-backed resolution at the United Nations (UN) paved the way for transferring control of international tax rules from the OECD – comprising 38 wealthy countries – to the UN. This shift ensures that all 193 member states are on a more equal footing, giving African countries a fairer chance at shaping outcomes on negotiations relating to international taxation.

Continue reading IMF projects improved growth for Africa but debt and limited taxes still prompt concern


ECA executive secretary Claver Gatete: Only a regional approach can deliver fast development

Rwanda’s former minister of finance Claver Gatete takes over as the executive secretary of the UN Economic Commission of Africa at a time of great change for the continent.

Claver Gatete takes over the leadership of the United Nations’ Economic Commission for Africa (ECA) at a pivotal juncture, as we approach the halfway stage of the UN Sustainable Development Goals (SDGs) and as Africa enters the second decade of its development blueprint Agenda 2063.

The long shadow of Covid-19 still hangs over the global economy with countries around the world, but especially in Africa, trying to recover from the supply chain shocks, sky-high inflation and the subsequent interest rate hikes. Adding to the current instability is the war in Ukraine – arguably a symptom of a re-ordering in the 70-year old rules-based, neoliberal order that had, seemingly, been entrenched in the wake of the last major disruption, the Second World War.

Into the mix comes the latest, harrowing manifestation of the long running conflict in the Middle East and its potential to spill over with incalculable consequences for the world. The need for finance Also on the table is the stark fact what while Western countries, especially in America and Europe, have been able to run large deficits and inject large amounts of cash to kick-start growth, those in Africa and the wider developing world continue to be bogged down by a lack of concessional or affordable financing.

To add to their woes they also face existential threats from climate-related events, hence the urgent demand for a greater say in the global economic and political structures that do not serve them fairly. This is the maelstrom that Gatete steps into as executive secretary of the UN agency, which wasspecifically set up to “promote the economic and social development of its member states, foster intraregional integration, and promote international cooperation for Africa’s development”.

In pursuit of this mandate, the Commission offers advice to member states, helps to strengthen macroeconomic policy and supports efforts towards regional and sub-regional integration. Perhaps the best summary of what the ECA has been responsible for was provided by the late Professor Adebayo Adedeji, the celebrated former head of the organisation, in his presentation – History and Prospects for Regional Integration in Africa” in 2002. He said that the ECA had been involved in “the establishment of virtually all the major existing African regional integration arrangements (ARIA) namely, the Economic Community of West African States (ECOWAS, 1975), the Preferential Trade Area for Eastern and Southern Africa (PTA, 1981) which was subsequently transformed into COMESA, the Central African Economic Community (CAEC, 1983) and the African Economic Community (AEC, 1991)”.

When we met Gatete in Victoria Falls, Zimbabwe, he offered a practical assessment of what the ECA’s role should be during this dramatic moment in the history of the continent. Its more routine task is to support macroeconomic management, which he explains includes fiscal management, supporting the real productive sectors and fostering a balance between payments and monetary policy.

“Everything you do has an implication on the monetary side. Whatever decision you take definitely has an implication because if you have to accumulate more debt or more deficit, it has implications. So we help countries to manage their own macroeconomic situation, because that’s what is going to actually stabilise the country,” he says.
Continue reading ECA executive secretary Claver Gatete: Only a regional approach can deliver fast development


A UAE company has secured African land the size of the UK for controversial carbon offset projects

In late September, Zimbabwe’s environment minister signed away control over a staggering amount of land — almost 20% of his country — to a little-known foreign company. Blue Carbon was a small, new outfit, not even a year old, but its chief was no fledgling entrepreneur: he was an Emirati royal whose family had ruled Dubai for 190 years, flush with oil money.

The Dubai-based Blue Carbon has secured forested land nearly equivalent to the size of the United Kingdom across five African nations to run projects to conserve forests that might otherwise be logged, preventing huge amounts of planet-heating carbon dioxide, or CO2, from entering the atmosphere.

Continue reading A UAE company has secured African land the size of the UK for controversial carbon offset projects


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