Refocus Development Models to Address Africa’s Poverty, Inequalities
By Christabel Ligami
African countries have been called upon to adopt an innovative and people-centered development model to address poverty and inequality on the continent.
According to finance experts at a round table panel discussion on policies and interventions to foster resilience and reduce poverty and inequality amid global shock at the 55th session of the Economic Commission for Africa in Addis Ababa, Ethiopia, persistent poverty and inequality in Africa are likely to undermine prosperity, peace and security on the continent.
The objective of the round table was to articulate a set of clear messages and recommendations for member States on actions that can be taken to lessen their economic and social vulnerability, reduce economic inequality and accelerate poverty reduction in Africa.
“It is becoming increasingly unlikely that African States will achieve many of the targets set out in the Sustainable Development Goals by the 2030 deadline,” said Hanan Morsy, Deputy Executive Secretary and Chief Economist, Economic Commission for Africa.
“Global shocks have wiped out more than two decades of progress the continent had made on poverty reduction. We need sustainable interventions.”
While giving the country experiences and measures to address the global shocks, the Governor, Bank of Mauritius, Harvesh Seegolam said in 2020 when the pandemic hit, the tourism sector came to a halt. To mitigate the impact of the slowdown, the government came up with both conventional and unconventional measures to address the effects of the pandemic. Key among them was to make the Mauritius central bank an independent institution.
“The government introduced moratoriums to support targeted sectors and introduced line-up credit,” said Mr. Seegolam, adding that the government also created the Mauritius investment cooperation which operated independently from the central bank, had independent audits to ensure money invested would benefit the bank.
The main objective of the Mauritius investment cooperation he said was to create more wealth for the future generation of the country. The intervention became profitable.
Minister of Finance, Ethiopia, Ahmed Shide said Ethiopia like any other African country was affected by overlapping shocks – Covid-19, the Ukraine war, conflict and drought. Response combined fiscal and monetary.
Precautionary measures, he said, were put in place to contain Covid-19, the government postponed personal income tax payments, rescheduled bank loan repayment, gave tax amnesty to different sectors, boosted local food production through the cultivation of more land and boosted meat production, more irrigation activities, expansion of Ethiopian airline, expanded digital innovation like digital payment.
The Minister of Finance and Budget, Central African Republic, Hervé Ndoba said the country has been facing fuel scarcity, and high cost of transport of commodities mainly because it is a landlocked country.
“To address these challenges the government created a dry port with warehouses for importers and put in place custom levies to limit import inflation. Specifically, the government created a custom base to leverage on production costs and adjusted the fuel pump prices,” said Mr. Ndoba.
“We target to increase domestic product through community levies. Financial diversification is what we are working on – green funding, blue economy.”
According to Executive Director, Joint United Nations Programme on HIV/AIDS, Winnie Byanyima, the biggest challenge for Africa is access to financial services. Even before the Covid-19 crisis and war in Ukraine, countries were borrowing at an interest rate of 8% and over while the high-income countries borrowed at lower rates of as low as 1%.
The high cost of borrowing, she said, is taking away Africa’s prospects of achieving SDGs. Also, the challenge of not being able to borrow in countries’ own currency points to how being treated unequally in accessing affordable finances.
“Discussion on financing for Africa is important as we approach the SDG summit in September,” said Ms. Byanyima adding that there is a need for countries to tackle the high cost of debts, connect financing with SDG achievement and push harder for Africa to have a seat at the G20 forum.
Acting Executive Secretary, Economic Commission for Africa, Antonio Pedro said Africa is falling further behind other global regions and now accounts for the largest share of the world’s poor, because of the increased poverty levels and inequalities. As a result, many African countries are facing declining revenues, rising debt stress and constrained fiscal space, all of which limit their capacity to respond to economic crises.
He said partnerships are key in addressing the African challenges.
“During the pandemic, ECA worked with the finance minister to find solutions to counter the effects of the pandemic in their respective sector, helped African countries access vaccines for its citizen,” noted Mr. Pedro.