The 2023 Edition of the Africa’s Dynamic Development Report is now available. The latest edition offers a comprehensive overview of economic policies on the continent focusing on the five regions. Drawing from a wide range of data sources to analyse public, private, domestic and foreign sources of investments, the report proposes a new narrative assessing Africa’s economic, social and institutional performance aligned to the African Union Agenda 2063 targets, and explores innovative ways to attract investments that are economically, socially, and environmentally sustainable. It a resource document to inform decision makers, business analysts, private investors, journalists, and other stakeholders on the development trajectories of African countries.
The report whose overarching theme is “investing in sustainable development” shows that Africa’s sustainable financing gap until 2030 is about USD 1.6 trillion, and estimates that the continent needs additional financing of about USD 194 billion annually to achieve the Sustainable Development Goals by 2030. It further shows that the annual sustainable financing gap is equivalent to 7% of Africa’s gross domestic product (GDP) and 34% of its investments in 2021.
Sustainable investments are essential for Africa’s economic, social and environmental development. Investments are sustainable if their economic, social and environmental benefits outweigh their total cost. The report argues that when mobilising and allocating investments, African countries need to manage tensions between economic, social and environmental goals such as productive transformation, social inclusion and resilience to climate change.
This includes balancing energy production and carbon mitigation, developing agricultural land use and conserving ecosystems, or creating mass employment while promoting labour standards. The report therefore provides an evidence-based analysis of Africa’s investment landscape and identifies important investment-related policies that promote sustainable development on the continent as a whole and in each of its five regions.
The report shows that better policies can turn challenges into opportunities, highlighting three priorities are on,
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Fit-for-purpose data to support informed investment decisions, by aligning risk perceptions to realities. Too many investors withhold decisions because of insufficient or costly information gathering.
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African-led partnerships can optimise the impacts of sustainable finance on development and better catalyse investments into local sustainable activities. The deepening and integration of domestic capital markets, the development of local currency bonds and the strengthening of ESG compliance are part of the solution.
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Deepening African integration further, notably by implementing the African Continental Free Trade Area (AfCFTA) and its protocol on investment, will harmonise policies among countries and facilitate value chains development.
At the launch of the report on the margins of the Specialized Technical Committee (STC) on Finance, Monetary Affairs, Economic Planning and Integration on 19th July 2023, in Nairobi, Kenya, H.E Amb. Albert Muchanga, African Union Commissioner, Economic Development, Trade, Tourism, Industry and Minerals, noted that if African countries could mobilise taxes as effectively as the country with the highest tax revenues on the continent (Tunisia at 32.5% of GDP), African governments could collect as much as USD 500 billion more in revenues. To enhance investment, he proposed actionable Africa-driven solutions could entail;
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Setting up a group of African billionaires observing that of the 46 billionaires in Africa, over half of them do not invest in the continent thus the low impact of local investments and philanthropy.
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More pension funds: Despite its potential, Africa attracts the lowest share of capital from institutional investors, compared to other world regions. OECD data show that pension funds across 15 African countries accumulated USD 380 billion of assets by 2020, with South Africa accounting for almost 80% of the total. In 2017-18, global pension funds and insurance companies allocated only 0.5% of their capital to African assets, compared to 1.2% for Latin America and the Caribbean and 4.2% for developing Asia.
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With enhanced domestic resource mobilization, African countries could mobilise taxes as effectively as the country with the highest tax revenues on the continent (Tunisia at 32.5% of GDP), African governments could collect as much as USD 500 billion more in revenues, boosted by efficiency in curbing illicit financial flows.
H.E Musalia Mudavadi, Kenya's Prime Cabinet Secretary, while lauding the detailed assessment of both opportunities and challenge reflected in the report, underscored the need for Africa to counter negative risk perceptions by both foreign and African investors. “We should encourage and enable risk assessments that are unbiased, thus making available risk mitigation strategies unknown to investors. Dependable risk assessment must be evidence-based and cannot happen without better and reliable data. We should strive to be innovative and continue to actively pursue new methodologies of appraising risks in African countries.”
OECD Director Ms. Ragga Arnadottir made emphasis on the importance of regional value chains to maintain economies against global shocks. "If we want economies to be socially sustainable, we need to invest in high-quality jobs at the regional level. Every year, across Africa, 29 million young women and men reach working age. If we want economies to become greener, we need to invest in a just transition. Africa contributes only 3% of global CO2 emissions, but climate change comes with immense human and economic costs for the continent."
Africa’s Development Dynamics report is jointly prepared by the African Union Commission (AUC) and the OECD Development Centre. Download a copy on Africa’s Development Dynamics 2023 Edition.
For further information, please contact:
Doreen Apollos | Information and Communication Directorate | African Union Commission | Tel: +251 115 517 700 | E-mail: ApollosD@africa-union.org l | Addis Ababa, Ethiopia.
Ms. Meaza Tezera | Economic Development, Trade, Tourism, Industry and Minerals | African Union Commission | E-mail:Meazat@africa-union.org | Addis Ababa, Ethiopia.
Information and Communication Directorate, African Union Commission I E-mail: DIC@africa-union.org
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