Africa urged to look within for Resources to Recover from Economic Crisis

ADDIS ABABA – Africa must lead the charge in mobilizing domestic resources to recover from multiple economic and social crises which have deepened poverty and widened inequality on the continent, the Economic Commission for Africa (ECA) top official has urged, warning that the continent risks missing the Sustainable Development Goals.

“Africa currently leads in global poverty,” ECA’s Acting Secretary-General Antonio Pedro, told participants at the 41st meeting of the Committee of Experts that kicked off Wednesday ahead of next week’s Conference of African Ministers of Finance, Planning and Economic Development Addis Ababa.

Pedro cautioned that without bold financial and climate action, Africa will be locked into a poverty trap.

With more than half of the world’s poor – 54.8% in 2022 being in Africa, the continent had overtaken South Asia with 37.6%, while the COVID-19 outbreak had pushed 62 million people into poverty in just one year, with an additional 18 million estimated to have joined their ranks by the end of 2022.

As many as 149 million non-poor remain at high risk of falling into poverty, Pedro said, further elaborating that 695 million people in Africa were either poor or face the risk of falling into poverty.

“Women and girls remain particularly vulnerable, and we are facing a potential reversal of the hard-won gains made on gender equity,” said Pedro, adding that, “Africa cannot just stay the course and hope that it gets better. It must lead the charge.”

The challenges are not insurmountable if Africa can implement systemic change and build resilient and sustainable systems, shifting away from a primary focus on efficiency that has dominated past decades.

‘Africa needs to finance its deve’t’

Pedro said investments in sustainable building up capital in critical assets – including human, infrastructure, and natural resources – were needed to provide an environment that can facilitate achieving the ambitions of the 2030 Agenda and Agenda 2063.

Therefore, governments must design strategies that simultaneously integrate economic, social and environmental objectives, he noted.

“First, we need to finance our development, ” Pedro urged, emphasizing that getting the macroeconomic fundamentals right can unlock the potential of home-grown solutions.

Nonetheless, he said, Africa still needs a fairer and more just global financial architecture that responds to its needs, bemoaning that many countries currently can’t access international financial markets because of rising interest rates and unworkable existing debt relief mechanisms.

He noted that Africa must aggressively pursue sustainable industrialization and economic diversification to transform its natural resources into tangible benefits for its people.

The battery and electric value chain development was a case in point.

“Put simply, our wealth in natural resources must work for the majority, not the few. To get to this point, we must be intentional in our approach, said Pedro, citing that the African Continental Free Trade Area (AfCFTA) can increase intra-Africa trade.

Climate finance an Opportunity

ECA’s acting chief also called for Africa to take center stage on climate action, saying:

“While we cannot overlook the fact that we are disproportionately suffering on impact and financing alike, we have significant opportunities to rebalance the scales on climate finance.”

Ethiopia’s State Minister for Planning and Development agrees with Pedro on the need to leverage climate financing.

“Poverty is Africa’s most pressing challenge,” state minister Nemera Gebeyehu said, remarking that Africa should advocate for financial changes to aid recovery.

“Climate action is impossible without finance,” stressed Nemera, noting that leveraging climate change financing can help tackle poverty in Africa.

African rainforests and the development of its carbon markets alone could unleash an estimated $82 billion a year in value at $120 per ton of CO2 sequestered and create 167 million additional jobs, according to ECA’s estimates.