Economy
Tax reform, digitisation key to funding development
Africa must digitise its economies, broaden its tax base, prevent further deterioration of fiscal and debt positions, and aim for double-digit growth to achieve the United Nations (UN) 2030 Sustainable Development Goals (SDGs), and the African Union (AU) Agenda 2063, states the 2019 Economic Report on Africa which was released at the Conference of Ministers (CoM) of Finance, Planning and Economic Development held in Marrakesh, Morocco.
This year’s Economic Report on Africa, a flagship publication of the UN Economic Commission for Africa (ECA), focuses on fiscal policy. Government revenues account for about 21.4 per cent, insufficient to meet African countries’ development financing needs.
“Digital identification can broaden the tax base by making it easier to identify and track taxpayers and helping taxpayers meet their tax obligations. By improving tax assessments and administration, it enhances the government’s capacity to mobilise additional resources. Digital identity systems yield gains in efficiency and convenience that could result in savings to taxpayers and government of up to US$50 billion a year by 2020,” the report revealed.
“The report identifies several quick wins in Africa’s pursuit of additional fiscal space to finance its accelerated development,” Vera Songwe, the ECA’s Executive Secretary, stated at the launch. “[It also] focuses on the instrumental role of fiscal policy in crowding-in investment and creating adequate fiscal space for social policy, including supporting women and youth-led small and medium enterprises,” Songwe said.
She added that “African countries continue to search for policy mixes to help accelerate the achievement of the SDGs. However, for many countries, financing remains the biggest bottleneck with implementing capacity a close second.” While analysing and highlighting both challenges and opportunities, the report also recommends comprehensive macro-economic reforms aimed at building financial resilience, placing emphasis on the need for Africa to accelerate growth to double digits by 2030 and to boost investment from its current 25 per cent of Gross Domestic Product (GDP).
While economic growth in Africa remained moderate at 3.2 per cent in 2018 due to “solid global growth, a moderate increase in commodity prices and favourable domestic conditions,” the report emphasised that Africa needs to do more, and work towards achieving a fine balance between raising revenue and incentivising investments in order to boost growth.
In some of Africa’s largest economies, South Africa, Angola and Nigeria, the report revealed, growth trended upwards but remained vulnerable to shifts in commodity prices. East Africa remains the fastest growing economy at 6.1 per cent in 2017 and 6.2 per cent in 2018, while in West Africa, the economy expanded by 3.2 per cent in 2018, up from 2.4 per cent in 2017. Central, North and Southern Africa’s economies grew at a slower pace in 2018 compared to 2017.
On Africa’s debt burden, the report discovered that the levels remained high as the countries increased their borrowing to ease fiscal pressures most of which have been precipitated by the narrowing of revenue streams that have continued since the commodity price shocks of 2014.
It argues that African countries can increase government revenue by 12 to 20 per cent of GDP by adopting a policy framework that strengthens revenue mobilisation, including through digitalising their economies, adding that digitisation could enhance revenue mobilisation by up to 6.0 per cent.
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By: A. Kapini Atafori
Economy
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Regional integration remains low - African Index
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African Regional Integration Index
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The African Continental Free Trade Area (AfCFTA) marks a momentous milestone for Africa but preliminary findings of the 2019 African Regional Integration Index (ARII), released at the Conference of Ministers (CoM) of Finance, Economy and Development held in Morocco indicates that regional integration on continent remains low.
The ARII was set up to monitor and evaluate the status of economic integration among African countries and provides a basis for member states to track their progress. The findings reveal that the Southern African Development Community (SADC) is the most integrated region in terms of trade, with South Africa as the most integrated country on the continent. The final ARII and the accompanying Assessing Regional Integration in Africa IX Report will be released later in the year.
In the five areas that were analysed - trade integration, regional infrastructure, productive integration, free movement of people and macro-economic integration - South Africa topped the ranking; with South Sudan as the least integrated mainly because of its modest performance in regional infrastructure and financial integration.
Integration in services contributed more than 53% of the continent’s GDP, but ratification of the protocol on the free movement of people has been slow, despite the 2016 launch of the Common Electronic Biometric African Passport, and the African Union (AU) Protocol on Free Movement of Persons. The continent’s large infrastructure deficit remains a major hindrance to intra-regional trade.
"It is up to Africans themselves to ensure that the initiative benefits them through hard work and efficient implementation of the mechanisms of the CFTA," stated David Luke, Co-ordinator of the African Trade Policy Centre, Regional Integration and Trade Division of the Economic Commission of Africa (ECA).
Leila Mokadem, Country Manager and Resident Representative in Morocco for the African Development Bank (AfDB), said despite the "tremendous" political support for the AfCTFA, there are still major challenges ahead in terms of implementation and pushing the agenda forward to meet the goal of increasing intra-African trade to 25% by 2023 from between 15% and 18% currently.
Mokadem cited weak productive capacity in Africa, high production costs, large infrastructure deficits and other challenges that affected Africa’s competitiveness. This is compounded by the number of small markets and 16 landlocked countries. "We cannot gloss over the challenges, but it is important to underscore the fact that it cannot be business as usual if Africa is to progress.
By: A. Kapini Atafori
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Economy
Digitised policy, Trade, Private Sector dominate African Ministers’ confab
(From left to right): Zouhair Chorfi, Secretary General of the Ministry of Economy and Finance, Morocco, newly elected Chair of the bureau of the committee of experts; Elsadig Bakheit Elfaki Abdalla, Chair of the outgoing bureau of the committee of experts; Vera Songwe, Executive Secretary of the UN ECA
The annual United Nations (UN) Economic Commission for Africa (ECA) Conference of African Ministers (CoM) of Finance, Planning and Economic Development kick-started in Marrakesh, Morocco, with emphasis on the importance of digitalisation in enhancing African economies.
In a press statement by the ECA noted that the weeklong event, which has drawn various seasoned experts and policy-makers from inside and outside Africa, will evaluate this year’s theme, ‘Fiscal Policy, Trade and the Private Sector in the Digital Era: A strategy for Africa’ against the backdrop of recent socio-economic development on the continent.
“The potential of Africa is, and has always been, promising… the continent has all the pre-requisites for rapid economic transformation in the next decade…[but] the importance of digitalization and the digital economy in driving growth and structural transformation, as well as optimizing fiscal performance in Africa cannot be overstated,” said Vera Songwe, the ECA Executive Secretary.
Songwe continued: “It is currently estimated to represent 15.5 per cent of global GDP [Gross Domestic Product] and is expected to reach 25 per cent of global GDP in less than a decade [and] there has been a rise in the digital innovation hubs on the continent, such as the Silicon Savannah in Nairobi and the Kumasi Hive in Ghana, not to mention more solution-oriented technologies such as Flutterwave which has enabled global payment processing in Nigeria through a single, seamless platform. In 2018, this application was reported to have processed $1 billion worth of transactions.”
She emphasized: “Such digital developments can have a transformative effect across the economy by reducing barriers to entry and expanding market reach for businesses, creating jobs, and boosting both domestic and foreign trade in goods and services.”
With the value of the global digital economy estimated at over US$11.5 trillion and set to rise to above US$23 trillion by 2025, according to Songwe, the effects of digital trade and economy in Africa are points for key debate.
Zouhair Chorfi, Secretary General at Morocco’s Ministry of Finance Morocco and incoming chair of the Committee of Experts of CoM, said “Digitalisation is a great opportunity for Africa. It can transform Africa by increasing competitiveness, promoting strong integration, reducing the cost of doing business. Morocco is ready to play its part.” Chorfi’s predecessor, lsadig Bakheit llfaki Abdalla also added: “With the advent of digital age, Africa can leapfrog and use new technologies to push the continent’s drive for sustainable development.”
The conference commenced with the opening of 38th Meeting of the Committee of Experts which deliberated on the 2019 theme, among others. This set the tone for the discussions which will centre on leveraging digital technologies to mobilise Africa’s domestic resources, strengthen competitiveness and speed up growth in all developmental sectors. The conference will provide a platform for delegates to review fiscal policies for the implementation of the Africa Continental Free Trade Area (CFTA).
The CFTA, adopted on 21 March 2018, remains two ratifications for the 22 member countries required to enforce the trade bloc that envisages, among much more, a GDP of over US$3 trillion and the creation of 300,000 direct and more than two million indirect jobs. Africa’s largest economy, Nigeria and the host country, Morocco, are among the countries yet to ratify the agreement.
The event will have a broad array of sessions and side events such as the launch of the ECA 2019 Economic Report on Africa, which assesses performance of fiscal policy and analyses, and challenges and opportunities in Africa. There will also be the launch of the African Fintech Network and a roundtable on trade and private sector development in the digital era.
Other issues and occasions include gender, youth, climate change, a special focus on the UN’s support to the African Union’s (AU) Year of Refugees and Internally Displaced Persons. There will also be the annual Adebayo Adedeji Lecture, named after ECA’s longest serving Executive Secretary, the late Professor Adebayo Adedeji. The lecture will pay tribute to the late thinker’s contribution to the discourse on development in Africa.
At the 52nd session, the Committee of Experts commenced on 20 March and ended on 22 March, 2019. The CoM takes place on 25 -26 March, 2019. The 20th session of the Regional Co-ordination Mechanism for Africa (RCMAfrica) and related events will occur on 23-24 March, 2019.
Established by the UN’s Economic and Social Council (ECOSOC) in 1958 as one of the UN’s five regional commissions, ECA’s mandate is to promote the economic and social development of its member states, foster intra-regional integration and promote international co-operation for Africa’s development. ECA also provides technical advisory services to African governments, intergovernmental organisations and institutions.
In addition, ECA formulates and promotes development assistance programmes and acts as the executing agency for relevant operational projects. Made up of 54 member states, and playing a dual role as a regional arm of the UN and as a key component of the African institutional landscape, ECA is well positioned to make unique contributions to address the continent’s developmental challenges. The ECA is headquartered in Addis Ababa, Ethiopia, with offices in Rabat, Morocco; Lusaka, Zambia; Kigali, Rwanda; Niamey, Niger Republic; Yaoundé, Cameroon; and Dakar, Senegal.
By: A. Kapini Atafori
General
Merck Calls for Action to eliminate infertility stigma
Dr Rasha Kelej, CEO of Merck Foundation and President of Merck More Than a Mother with Burundian First Lady Denise Nkurunziza, Ambassador of Merck More Than a Mother, addressing the journalists during the Health Media Training
Merck Foundation, the philanthropic arm of Merck KGaA Germany, organised the first Merck Foundation Health Media Training in Bujumbura, Burundi, in partnership with Denise Nkurunziza, the First Lady of Burundi and Ambassador of Merck More Than a Mother, together with the Ministry of Health and Ministry of Communication and Media, to stem the stigma around infertility in the country and rest of Africa.
The training was a part of Merck More than a Mother community awareness programme and was organised for the first time in Burundi for local media representatives. “I am delighted to initiate this important training session as I strongly believe that media play a significant role to influence our society to create a cultural shift. They have the capacity and ability to break the stigma around infertility in the community”, explained Dr Rasha Kelej, CEO of Merck Foundation and President of Merck More than a Mother.
According to a press release by Merck Foundation, the training was addressed by Denise Nkurunziza, Dr Kelej, Hon. Frederic Nahimana, Minister of Communication and Media of Burundi, as well as stalwarts of the media and top infertility experts. It also provided a great opportunity for the journalists to meet the experts and network with each other and work as a unit to eradicate the stigma around infertility in Africa. It was attended by journalists working for print, TV, radio and online media.
“The Merck Health Media Training program will focus on the international standards and media ethics for reporting sensitive issues like infertility in Africa. It was designed to benefit the journalists in understanding the infertility issues in African communities and to learn the best media practices to cover such issues,” explained the First Lady.
Merck is a leading science and technology company engaged in healthcare, life science and performance materials. Almost 53,000 employees work to further develop technologies that improve and enhance life – from biopharmaceutical therapies to treat cancer or multiple sclerosis, cutting-edge systems for scientific research and production, to liquid crystals for smartphones and LCD televisions. In 2017, Merck generated sales of € 15.3 billion in 66 countries.
Founded in 1668, Merck is the world's oldest pharmaceutical and chemical company. Merck holds the global rights to the Merck name and brand. The only exceptions are the United States and Canada, where the company operates as EMD Serono, MilliporeSigma and EMD Performance Materials.
By: A. Kapini Atafori
