Addis Ababa July 11/2018 Mobilizing domestic resources in public and private sectors is crucial to Africa’s collective success in achieving 2030 sustainable development goals (SDGs) and the 2063 Agenda, according to Economic Commission for Africa.
Speaking at the beginning of a three-day high-level policy dialogue on development planning in Africa that opened in Cairo, Egypt, yesterday, Macroeconomic Policy Division Director at ECA, Adam Elhiraika said the 2030 Agenda and the Addis Ababa Action Agenda on financing for development underscore that African countries need to mobilize greater financial resources to achieve the SDGs.
African countries need to tap into diverse funding sources for their development programs from tax and non-tax public revenues, public borrowing, private investments and innovative sources of finance, he added.
According to Elhiraika, Africa needs from 600 billion USD to over 1.2 trillion USD annual additional financing to achieve the SDGs.
“We will need more effective use of the available resources. In particular, public financial management must be improved, including through good budgeting and effective resource allocation towards priority areas,” he pointed out.
Elhiraika further stated that in 2016, Africa’s tax revenues totaled 500 billion USD, which is about 3 times the level of ODA (Official Development Assistance), FDI and remittances combined. Yet tax to GDP ratios on the continent are around 18 percent, which is low compared to other regions.
“There are a number of ways in which tax revenues can be increased, for example by formalizing or otherwise taxing the informal sector, which is estimated to account for 50 to 80 percent of GDP in some African countries and remains largely untaxed,” he added.
Africa is losing over 100 billion USD annually through Illicit Financial Flows (IFFs), Elhiraika said, adding that IFFs reduce the rate of taxpayer compliance throughout the economy, draw the economy’s factors of production and resources into the illicit economy, which will affect overall economic activity and undermine social spending or productive investment programs.