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Mo Ibrahim Report Urges Financial Reform For Africa’s Goals

THE Mo Ibrahim Foundation has released a groundbreaking report titled Financing Africa: Where is the Money?, offering an in-depth analysis of the financial landscape necessary for Africa to meet its development and climate objectives. The report underscores that while the necessary resources largely exist, inefficiencies and misuse prevent them from being effectively allocated.

Commenting on the report, Mo Ibrahim, Founder and Chair of the Mo Ibrahim Foundation, stated, ‘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. The money is already there. However, current processes prevent resources from being used to properly address the challenges. Steps must be taken to reform the international financing system and update African debt structuring, risk assessment and mitigation, and aid conditionalities. Even more, our continent must stop squandering its assets and take proper ownership and responsibility. In short, we must apply good governance to ensure these assets are adequately leveraged for the best interests of our people.’

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The report highlights the challenges in assessing Africa’s financial needs due to inconsistent data, yet all estimates point to significant figures. It stresses that climate finance must complement, not overshadow, development finance, ensuring that African nations are not forced to choose between environmental sustainability and development.

An examination of financial contributions from non-African sources reveals that Official Development Assistance (ODA) accounts for nearly 10 percent of the continent’s financial resources. However, ODA from Western donors is predominantly directed towards health and education, often with specific conditions. Meanwhile, contributions from non-DAC countries are steadily increasing and meeting the demand.

Debt is identified as a problematic solution, with stock and servicing costs tripling since 2009, complicating traditional relief efforts. The report points to issues such as inadequate African risk assessment and mitigation, the IMF’s specific surcharges, and dormant ODA funds.

Significantly, the report highlights the potential of Africa’s domestic resources. According to the African Union, these resources should cover 75 percent to 90 percent of the financial needs for Agenda 2063. However, many of these resources remain dormant or are misused. Addressing Illicit Financial Flows (IFFs) could generate up to $100bn annually, surpassing both ODA received and remittances. Strengthening tax systems, which could quickly raise the tax-to-GDP ratio from its current 15.6 percent, is identified as a critical step. In 2019, Africa lost $46bn in corporate taxes due to tax incentives, more than half of the ODA received.

The report also explores the potential of leveraging remittances, sovereign wealth funds, pension funds, and private wealth. Additionally, monetising Africa’s green assets, such as biodiversity, critical minerals, and carbon-sinking potential, can unlock significant financial resources if managed with good governance.

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