Africa urged to turn to trade as aid declines

In an interactive session with delegates at the Expert’s Segment of the Conference of African Finance Ministers in Addis Ababa, ECA Executive Secretary Claver Gatete said disruptions in global trade policy and the retreat of aid and concessional finance signalled that it was time for Africa to look inward and embrace home-grown solutions.    

“The aid is declining and we as Africans may as well forget about it and focus on trade and investment. We have to look inward and see what we can do differently as intra-African trade has remained the same for decades,” Gatete said. 

He said there are many new players helping to plug the gaps in infrastructure and other funding, including India and funds from the Middle East nations. 

But the playing field is not level, he said citing the fact that the IMF shareholding for the entire continent is equivalent to that Germany. “How can that be fair?”

Gatete emphasized the need for Africa to take a different approach internally even as it fought for a fairer deal with the international community.

He highlighted the shift towards private sector-driven growth, calling on policymakers to de-risk key sectors and improve the business environment. 

He called for expanded efforts to boost domestic resource mobilization, noting that African nations had to reform their tax systems to cut reliance on aid and drive their own development.

“How come we’re still at 15.6% of GDP in terms of tax? This is too low. Some of our countries are below 10% of GDP . This is not acceptable by any standards. For you to be competitive, you have to be at 25% at the very minimum. That’s when you can sustain your own development,” he remarked. 

Gatete bemoaned the fact that the whole of Africa only had two investment grade countries. “We need to work together to find out what has gone wrong.”

He added that ratings agencies were a problem for Africa as their work is pushing up the cost of much-needed capital and yet they did not understand the workings of African countries.