President Paul Kagame has called on African countries to address rising illicit financial flows, tax evasion and misallocation of Africa’s resources.
He observed that by taking action, Africa will enable the continent to finance its own development.
President Kagame was speaking at the African Leadership Forum (ALF) 2018 held in Kigali.
The summit is under the theme, “Financing Africa’s Transformation for Sustainable Development”.
Despite popular misconceptions, Kagame said, Africa can address its own development, given that the continent has funded the development of other continents.
He added that the major challenge at the moment was not inadequate technical capacities but rather poor mindsets and lack of political will.
“Africa can finance its own development, at least a big part of it. There is no doubt about it. We know this because Africa finances other people’s development, and always has,” Kagame said.
Citing some of the leakages and losses of resources that could have otherwise funded development, he said that the value of illicit financial flows, evaded taxes and commodities extracted exceed foreign aid, which the continent often relies on.
“We have to take responsibility for the misallocation of Africa’s resources and take steps to correct that,” he added.
Challenging African countries to take corrective steps to change the status quo, the president noted an urgent need for adjustment of mindsets.
“I would rather argue, that we need to mobilise the right mindsets, rather than more funding. After all, in Africa, we have everything we need, in real terms. Whatever is lacking, we have the means to acquire. And yet we remain mentally married to the idea that nothing can get moving, without external finance. We are even begging for things we already have. That is absolutely a failure of mindset,” the President said.
The United Nations Economic Commission for Africa’s (ECA) in May estimated that illicit financial flows for Africa are over $100 billion annually.
Among the corrective measures to sustainably finance the continent’s development, Kagame said, include accountability, regional integration and fostering the growth of African enterprises.
On accountability, he said that by building trust that public funds will be spent on the right things, African governments can mobilise resources through tax collection.
The President, who is also the current African Union Chairperson, said that the success of the financial reform of the AU was proof of the continent’s ability to fund common priorities.
Through the financial reform, contributions to the organisation’s Peace Fund have gone up and member-state contributions have become more stable.
“The success of the financial reform of the African Union, adopted in 2016, shows that Africa has the will and ability to fund common priorities. We should build on this,” Kagame added.
The President also called for improvement of regulatory climate for enterprise and trade across Africa to enable the continent’s private sector to adequately contribute to development.
He questioned why a majority of African countries continue to import items that can be produced locally.
“In my view, the definition of “illicit flows” should be expanded to include the habit of importing things that we already have right here in our countries, and our region….We have to be mindful of the huge financial losses our continent incurs, as a result,” he added.
Former Tanzanian President, Benjamin William Mkapa, said that to mobilise more resources for development, governments should consider facilitating the development of businesses in their respective countries to have reliable tax receipts.
Former President of Somalia, Hassan Sheikh Mohamud, called for increased political will that would foster cooperation between the public and private sectors for increased efficiency in financing development.
Mohamud said that this would see the eradication of persistent bottlenecks such as high cost of remittances, unreasonable high costs of doing business as well as better conditions for the private sector.
Dr Mukhisa Kituyi, the Secretary-General of the United Nations Conference on Trade and Development, said Africa can make strides by relying less on foreign assistance and turning to trade.
Kituyi said that it is unlikely that the African Union Agenda 2063 and 2030 goals will be achieved if the continent does not alter its models for mobilising financing for development.
The summit is organised by Uongozi Institute, an institute established by the Government of Tanzania to support African leaders to attain sustainable development.
Among the former heads of state who attended the event include Joaquim Chissano of Mozambique, Olusegun Obasanjo of Nigeria, Armando Guebuza of Mozambique, and Moncef Marzouki of Tunisia.
The summit is attended by over 100 distinguished leaders from Africa’s public sector, the private sector, academia and civil society.