Good governance required

An old African saying goes: “When the music changes, so does the dance.” This proverb succinctly expresses the challenges facing the African continent, and the world at large, at present, with ecological catastrophe looming on the horizon. It can no longer be business as usual in governance if Africa is to see through the 21^st century and experience sustainable development.

The good news is that the groundwork for a different future has already been laid by the adoption of the Addis Ababa Action Agenda on sustainable financing, the Sustainable Development Goals (SDGs), the 2030 Agenda for sustainable development, the Paris COP21 deal and, finally, the World Trade Organisation (WTO) Nairobi Package. These global initiatives, which dovetail with Africa’s own AU Agenda 2063, provide the high-level strategic and policy framework that could potentially fast-track the continents’ economic, social and environmental progress.

That said, however, there are significant challenges that pose a serious threat to the continent’s future. In addition to the legacy challenges of poverty, food insecurity, ballooning youth unemployment, climate change and ecosystems degradation, commodity prices, whose revenues contribute to over 50% of Africa’s GDP, have declined by over 40% since their peak in 2011. This dramatic decline has translated into a staggering loss of revenue –  over US$63 billion, and a trail of economic devastation. The writing is on the wall. For Africa to navigate these headwinds and opportunities, we need to take a serious look at tackling governance challenges.

What poor governance is costing us

Corruption and illicit financial flows (IFFs)

Africa loses between US$50 billion to US$150 billion annually through tax loopholes, illicit financial dealings and questionable offshore accounts. This is a product of both domestic and international corruption. The seriousness of this issue was highlighted by the 2015 joint AU/ECA high-level panel on illicit financial flows, which noted that in 50 years Africa has lost as much through illicit financial flows as it has received in official development aid. Cumulatively, from 1980 to 2009, the continent lost approximately US$1,3 trillion through IFFs, enough to cover its external debt four times. This is money that could have been used to fund education, health care and infrastructure for a continent in desperate need of all three.

From 1980 to 2009 the continent lost approximately US$1.3 trillion through illicit financial flows. This is enough to cover its external debt four times.

Environmental degradation

Even though environmental resources account for 77% of total exports and 42% of government revenues, a lack of targeted policies aimed at re-investing a portion of these earnings into environmental protection means the continent continues to lose the foundation of its growth. For instance, a lack of targeted measures to protect Africa’s ecosystems means the continent is currently losing an estimated US$68 billion annually due to environmental degradation. Sub-optimal policies and inadequate governance structures in key environmental sectors such as forestry, wildlife, fisheries and mining translates into further annual losses estimated at between US$70 billion to US$213 billion from illegal logging, illegal trade in wildlife, unregulated fishing and illegal mining practices.

Food losses

The lack of adequate policy and institutional measures to prioritise investment that would help to eliminate agro-value chain inefficiencies means Africa, which currently can still not adequately feed itself, loses food worth between US$4 billion and US$48 billion annually as a result of post-harvest losses. On top of this, the continent loses out on 6,6million tonnes of potential grain harvest due to degraded ecosystems. To cover the shortfall, the continent spends US$35 billion annually on imports, which is inadequate as a quarter of the total population still go to bed hungry.

Reversing these food losses means the continent could recover up to US$35 billion annually, which, through appropriate policies, could be re-invested to finance other developments while simultaneously making a leap towards food self-sufficiency without having to increase current production levels.

With commodity prices declining, Africa will have to bank on the agricultural sector for sustainable growth

What must we do to build good governance structures? 

An optimal governance structure that will assure the realisation of socially inclusive, environmentally sustainable growth will, among other things, require us to do the following:

Target policies that would unlock the latent potential of Africa’s agriculture:

An optimised agro-value chain is a potential “silver bullet” for the continent but achieving this will require that crucial fundamental policies, to enhance efficiency and marketability, be prioritised.

Of specific importance are regional integration and immigration policies to facilitate the free movement of people and goods across the continent; trade policies that prioritise intra-African trade to catalyse the creation of consolidated goods, services and labor markets; production policies that enhance the competitiveness and marketability of local produce and ensure that the continent produces what it consumes, importing only what cannot be produced locally; policies domesticating in full the Yamoussoukro Decision to open up Africa’s airspace for affordable intra-Africa air travel; prioritised infrastructure development policies, especially those aimed at building roads and expanding electricity access in rural areas, where 70% of Africa’s food producers reside; women empowerment policies to enhance agro-productivity, considering that women produce 80% of the food consumed on the continent; and, finally, policies to domesticate high-level climate and development strategy positions, such as the COP21 and the AU Agenda 2063.

Prioritise the stymieing of IFFs through:

The building of partnerships to improve tax administration: It is documented that an investment of only US$ 1 in capacity building in policy making and strengthening tax administration institutions can return as much as US$1 650. Key areas of focus to seal IFF loopholes should be the improvement of regulatory oversight in tax administration and the enhancement of negotiating capacities with multi-national companies.

Fiscal reforms: Scrapping unnecessary tax expenditures, such as incentives given to investors who are attracted by natural resources or a growing consumer base. These expenditures constitute a significant loss of revenue for the region, ranging from 1,7% to 4% of GDP in individual countries, and they create loopholes for fraud.

Implementation in full of the recommendations of the African Union’s high-level panel on IFFs: African countries should individually and collectively through the AU, develop an implementation framework for these recommendations.

The Africa we want, where no one experiences want or need, is within reach but it will take collective action to build an enabling governance structure that would actualise sustainable development for the benefit of all. 

Dr Richard Munang is Africa Climate Change & Development Policy Expert. He tweets as @RichardMunang

Mr Robert Mgendi is the Adaptation Policy Expert

The views expressed here are those of the author and do not necessarily represent those of the institution with which he is affiliated.