..Africa’s remittances top $63.8b
African governments have been charged to seek alternative ways of addressing the increasing debts accruing to them due to global economic recession.
Besides, the governments are also enjoined to add new revenue sources to finance their development, such as remittances, public-private partnerships (PPPs), and a clampdown on illicit financial flows, warning that debt looks unsustainable in some countries.
According to the United Nations Conference on Trade and Development (UNCTAD), in a report, while governments should be vigilant of the borrowing risks, it observed that PPPs have also started to play a more prominent role in financing development.
The report noted that in Africa, PPP are being used especially to finance infrastructure. Of the 52 countries considered during the period 1990-2014, Nigeria topped the list with $37.9 billion of investment, followed by Morocco ($27.5 billion) and South Africa ($25.6 billion).
UNCTAD, in a report released recently titled, “UNCTAD Economic Development in Africa Report 2016”, observed that the region’s external debt ratios appear manageable, but African governments must take action to prevent rapid debt growth from becoming a crisis, as experienced in the late 1980s and 1990s.
According to the report, which is subtitled, Debt Dynamics and Development Finance in Africa, at least $600 billion would be needed each year to meet the Sustainable Development Goals in Africa, this amount equates to roughly a third of countries’ gross national income. It noted that official development aid and external debt are unlikely to cover these needs.
UNCTAD Secretary-General, Mukhisa Kituyi, said, borrowing can be an important part of improving the lives of African citizens, “but we must find a balance between the present and the future, because debt is dangerous when unsustainable.” The report disclosed that several countries have also borrowed heavily on domestic markets, including Nigeria, Ghana, Kenya, Tanzania, and Zambia.
According to the report, in some countries, domestic debt rose from an average of 11 per cent of Gross Domestic Product in 1995 to around 19 per cent at the end of 2013, almost doubling in two decades. “A decade or so of strong growth has provided many countries with the opportunity to access international financial markets. Between 2006 and 2009, the average African country saw its external debt stock grow 7.8 per cent per year, a figure that accelerates to 10 per cent per year in the years 2011–2013 to reach $443 billion or 22 per cent of gross national income by 2013.”
“Many African countries have begun the move away from a dependence on official development aid, looking to achieve the Sustainable Development Goals with new and innovative sources of finance”, Kituyi said.
The report argued that African countries should look for complementary sources of revenue, including remittances, which have been growing rapidly, reaching $63.8 billion to Africa in 2014.
The report explained how remittances and diaspora savings can contribute to public and development finance.
Together with the global community, Africa must also tackle illicit financial flows; which can be as high as $50 billion per year. Between 1970 and 2008, Africa lost an estimated $854 billion in illicit financial flows, roughly equal to all official development assistance received by the continent in that time, the report stated.