Enhancing Sustainable Development in Africa: ECA's Role in Financing for Agenda 2030 and 2063

1. Dialogue of the Executive Secretaries of the Regional Commissions with the UNGA Second CommitteeRole of Regional CommissionsFinancing for Development

2. Like other regions, Africa’s strength in the implementation of Agenda 2030 and Agenda 2063 lies in the mobilization of internal and external resources for development. • The role of ECA has been critical in shaping Africa’s priorities for financing Africa’s structural transformation: the AUC-ECA Elements Paper on Financing for Development underpinned the position of African negotiators in the Addis Ababa Conference; Africa’s position on the post-2015 agenda was well articulated in Agenda 2030.

3. The way ECA has been working ensures that interventions are fostering the UN Secretary General’s priorities and commitment to Member States. • The knowledge generation and delivery activities provide for a coherent approach to the ‘sustainable peace’ agenda by connecting efforts for peace and security, sustainable development and human rights.

4. Agenda 2063, the 2030 Agenda for Sustainable Development and “sustaining peace” require significant resources to be implemented under a well-coordinated development plan to allow African countries to get the requisite fiscal space. • ECA has been working to entrench development management through a wide range of programmatic interventions including better development planning and economic, evidence-based decision-making and promotion of private sector development.

5. These actions will help member states implement both Agenda 2063 and the SDGs. The Public Financial Management (PFM) /PEM work is critical since: • Domestic public finance is essential to providing public goods and services, increasing equity, and supporting macroeconomic stability and long-term development; • Effective mobilization, budgeting and use of resources are critical to achieving sustainable development, along with accountability and alignment with the Sustainable Development Goals (SDGs) and Agenda 2063; • Improved policies and implementation will help realize more efficient and effective resource mobilization, service delivery and the realization of sustainable peace.

6. Reforms of Domestic Taxation Systems • ECA’s recent publications including Financing Africa’s development and Strategies to Mobilize Domestic Resources and Investment for Structural Transformation underscore that domestic resource mobilization will undoubtedly continue to underpin development financing in Africa. • ECA, jointly with AUC, prepared a background paper for Africa’s regional consultation on FfD on the critical importance of domestic resource mobilization through taxation: tapping on relatively underutilized sources of taxation, taxing financial transactions, addressing illicit financial flows including tax avoidance and improving corporate governance of extractive industries in resource-rich countries.

7. There is also a need to address the regulatory and tax reform challenges necessary to raise more resources that are domestic, tax compliance through provision of affordable state pensions and other welfare packages, and improved public service delivery at national, sub-national and local levels.

8. ECA’s study on Base erosion and profit shifting in Africa: reforms to facilitate improved taxation of multinational enterprises (soon to be published) recommends that African countries need to carry out a cost-benefit analysis of tax incentives to determine their efficiency and to curtail the harmful tax practices of tax incentives that lead to a race to the bottom.

9. Strengthening public expenditure management ECA has delivered a number of services to member-states in both knowledge generation and knowledge delivery to enhance PFM as part of the broader development agenda. Recent knowledge products and delivery in these areas include but are not limited to:

10. African Governance Report (AGR) IV (2016) – focuses on corruption in the context of the good governance-structural transformation nexus; • AGR (2017/2018) - explores the link between good governance and structural transformation with a focus on Natural Resources Governance and Domestic Resource Mobilization for Structural Transformation in Africa. • Occasional Paper 2015/2016 – Strengthening economic governance in Africa: lessons on audit from Brazil, Russia, India, China and South Africa (2017) - recommends the strengthening of audit and wider accountability institutions such as parliament and anti-corruption courts.

11. The study On Corruption in Public Procurement: The case of Infrastructure in Africa (2017) – discusses the importance of procurement as an essential element of PFM and enhancing DRM - especially the need to reduce resource leakages and corruption through public procurement; • The study on Corruption in local governance and traditional institutions in Africa (2017) – discusses the nature of corruption in local government and traditional institutions. This intends to help countries to design anti-corruption programmes and enhance resource use and service delivery at the local levels in Africa.

12. The Macroeconomic Framework for Structural Transformation in Africa (2017) has a focus on the importance of fiscal policy and PFM in long-term structural transformation in Africa; • ECA collaborated with the AUC in the development and roll out of the Regional Anti-Corruption Programme in Africa, 2011-2016; • ECA supported the development and setting up of the African Peer Review Mechanism in 2013, a framework on entrenching good governance including PFM in Africa.

13. Private sector engagement and financing • Collaborated with the AUC in validating the continental agribusiness strategy to create a platform for stronger engagement of the private sector for agribusiness on the continent; • A training was held to strengthen the capacity of value chains actors to promote and develop integrated agricultural value chains, in support to the achievement of SDGs 1, 2, 8 and 9 through enhancing access to food, promoting inclusive growth and fast-tracking agro-industry and agribusiness; • Finalized in partnership with the AU and NEPAD, a UN Development Account project on implementing a biofuel programme for household and transport sectors, which supports the achievement of SDGs 7, 9 and 13.

14. In line with Addis Ababa Action Agenda (AAAA), ECA has undertaken a policy paper on the private sector and its potential role in African economic growth as an alternative source of financing investments in Africa to generate growth and jobs in the continent by: - improving availability of funds for the private equity industry; - encouraging more impact investments; - enabling measures to enhance the role of governments - fostering greater interaction between policymakers and private equity to support private equity industry.

15. Public-private partnerships for infrastructure • The joint background paper of ECA and AUC (2015) for the regional consultation on FfD in preparation for the 3rd international Conference on FfD also stressed the fact that filling the financing gap in Africa will require effective collaboration between Governments and the private sector. • However, the private sector has so far played only a limited role in the implementation of Africa’s development projects, especially its infrastructure and sustainable development projects.

16. The paper recommends that: 1 - The private sector should step up its participation in infrastructure development on the continent. Public-private partnerships need strengthening and new models of such partnerships and high-level platforms for public-private sector consultations are required. 2 - African Governments should encourage the private sector to step up its participation in infrastructure and sustainable development projects on the continent. Public-private partnerships should be strengthened and new models of such partnerships should focus more on enhancing the role of domestic private sector should be developed, along with high-level platforms for public-private sector consultations.

17. ECA’s Policy Brief (2016) - Broadening the participation of the local private sector in Africa’s construction and energy sectors through modern industrial policy - pointed out that expanding the role of domestic private sector in major infrastructure projects is a major challenge in Africa. This sector is particularly absent in the construction and energy sectors, which are fundamental to the achievement of Africa’s transformational goals. • ECA’s (2015) study on Enhancing domestic private sector development in Africa: Construction and energy sectors highlighted the positive fact that PPP units have recently been created by many African countries, mainly to ensure that projects are affordable, generate value for money and minimize or mitigate contingent project liabilities for government treasuries.

18. Over the past few years, African countries such as Kenya, the United Republic of Tanzania, Uganda, Malawi, Zambia, Mozambique, Ghana and Nigeria have started setting up partnership units to oversee project development. • These units represent steps forward in terms of government understanding and ownership of public-private partnership’s project development. The emergence of government partnership units has been paralleled by a growing new body of guidance on the use of cost-benefit analysis specifically for public-private partnership projects.

19. Enhancing financial inclusion • The main objective of Agenda 2063 and the SDGs is to create transformed, inclusive and sustainable economies. The financing needs related to the implementation of the SDGs and Agenda 2063 are enormous. • Quantifying the needed financial resources to implement the SDGs is complex and estimates vary widely, from US $2.5 trillion to over $5 trillion a year (Upcoming ECA Report Innovative Methods to Financing the SDGs). • Both agendas are founded on inclusive growth and development, i.e., the principle of leaving no one behind. They call for transformative shifts, integrated approaches, and solutions to structural barriers to sustainable development.

20. Therefore, Financial Inclusion is crucial to sustain economic and social development. It has a multitude of dimensions, reflecting the variety of possible financial services, from payments and savings accounts to credit, insurance, pensions, securities markets and Financial Technology (Fin-Tech), as highlighted in the upcoming ECA report on Innovative Methods to Financing the SDGs; • The publication Expanding and Strengthening Local Entrepreneurship 2017, highlights the need for financial inclusiveness and availability for innovation, SMEs and women and youth entrepreneurs. Finding show that women appear to be heavily excluded from entrepreneurship policy and industrialization and the goal of empowerment seems vague and centered around social empowerment.

21. ECA produced the Observatory on Regional Integration in Africa “ORIA” (first and second edition): • The ARII reports and the ORIA are largely in line with priorities indicated in the AAAA, including infrastructure, productive capacity, trade finance, trade policy and trade facilitation; • It provides comprehensive information and data on Africa’s regional integration agenda, including achievements, milestones, challenges and constraints throughout the regional economic communities.

22. Financing for Development advocacy, consultation and institutional networking • ECA actively participated in the 2016 and 2017 reports of the UN Interagency Task Force on Financing for Development, which tracks the implantation of the AAAA. • The Consortium to Stem Illicit Financial Flows from Africa was established to follow up on the implementation of recommendations by the High Level Panel on Illicit Financial Flows, agree on work plan and deliverable actions and map out a clear division of labor among its members based on comparative advantage and partnerships.

23. ECA is working with other regional commissions on the methodology to estimate IFFs. The current focus is on replicating the ECA’s model on trade mis-invoicing by global regions to be aggregated by DESA’s office on FfD. • ECA convened two caucus meetings of African Central Banks, which provided a platform for reflection on enhancing the effective engagement of Africa's Central Bank governors to better serve the continent’s development agenda.

24. ECA kick started a collaboration with the Arab Bank for Economic Development in Africa (BADEA) by working on an Arab-Africa Fact Book on investment, trade and financial relations between the two regions. • The fact book tracks key economic and financial indicators of cooperation between the two regions that will be essential for benchmarking Africa-Arab economic relations, identify challenges and opportunities in such relationships and crafting strategies to leverage the relationship for the mutual benefit of both regions.

25. Thank you