Mo Ibrahim Foundation’s Report Highlights Financial Challenges and Opportunities for Africa’s Development and Climate Goals » Capital News
NAIROBI, Kenya, June 19 – The Mo Ibrahim Foundation has released its latest report titled “Financing Africa: Where is the Money?”, providing a comprehensive analysis of the financial needs necessary for Africa to meet its development and climate goals, and the resources currently available.
The report emphasizes that while resources mostly exist, they are often misallocated, dormant, or misused, particularly when it comes to domestic resources.
Commenting on the report’s release, 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. As this report outlines, the money is already there. But 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 own 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.”
The report identifies the substantial but often incoherent figures associated with Africa’s development and climate goals. Despite the complex task of assessing financial needs due to inconsistent data from multiple sources, the figures consistently point to staggering amounts. The report underscores the critical need to ensure climate finance does not crowd out development finance, forcing African nations to choose between development for their populations and environmental sustainability.
The report also analyzes financial contributions from non-African sources. Official Development Assistance (ODA) accounts for nearly 10% of the continent’s financial resources. However, ODA from western donors remains primarily directed towards health and education and often comes with specific conditionalities. Meanwhile, non-DAC (Development Assistance Committee) countries’ commitment to Africa is steadily growing and addressing the demand.
Debt is highlighted as an unsustainable solution, with stock and servicing costs tripling since 2009. The increasingly complex structure of African debt renders traditional relief efforts obsolete. Other key issues include inadequate African risk assessment and mitigation, the IMF’s specific surcharges, and dormant ODA funds.
A significant portion of the report focuses on Africa’s domestic resources, which, according to the African Union, should on average cover between 75% and 90% of the needs to finance Agenda 2063. However, most of these resources appear to be potential or dormant at best and are often misused. The report suggests that preventing leakages through Illicit Financial Flows (IFFs) could bolster resources by up to $100 billion annually, surpassing both ODA received ($81 billion annually) and remittances sent back to the continent ($97 billion annually).
With the average tax-to-GDP ratio in Africa still at 15.6% – half the OECD average – strengthening tax systems is seen as a quick win. The report notes that Africa lost $46 billion in corporate taxes due to tax incentives in 2019, more than half of ODA received. Additionally, leveraging remittances, sovereign wealth funds, pension funds, and private wealth is highlighted as having significant potential. Monetizing Africa’s green assets, including biodiversity, critical minerals, and carbon-sinking potential, can unlock notable financial resources, provided that good governance and allocation of resources to people’s development are ensured.
This report is a product of the Ibrahim Governance Forum, part of the Ibrahim Governance Weekend, held every year in a different African country. Although scheduled to take place in Nigeria, the IGW 2024 was canceled due to unforeseen circumstances. Nonetheless, the expected speakers and panelists provided key contributions that are incorporated into the final report.
The findings and recommendations of this report are critical for policymakers, stakeholders, and the international community as Africa seeks to navigate its path towards sustainable development and climate resilience.
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