Statement by Mr. Claver Gatete at the Regional Consultation for the Fourth International Conference on Financing for Development in Africa

REGIONAL CONSULTATION FOR THE FOURTH INTERNATIONAL CONFERENCE ON FINANCING FOR DEVELOPMENT IN AFRICA

Statement

By

Mr. Claver Gatete

United Nations Under-Secretary-General and

Executive Secretary of ECA

Banquet Hall, UNCC, Addis Ababa, Ethiopia

18-19 November 2024

Your Excellency, Ahmed Shide, Minister of Finance, Ethiopia,

Your Excellency, Albert M. Muchanga, Commissioner, African Union Commission,

Your Excellency, Chola Milambo, Co-facilitator of the Preparatory Committee for FfD4,

Distinguished Delegates,

Colleagues,

Ladies and Gentlemen:

I am delighted to welcome you to this momentous regional consultation for the Fourth International Conference on Financing for Development in Africa here at the ECA - a place dedicated to transforming ideas into action for Africa's sustainable development.

I also extend my heartfelt thanks to our partners and representatives from governments across the continent, including our gracious hosts, Ethiopia, for your invaluable participation and support in making this event possible.

Just last month, we proudly re-inaugurated, in our compound, the newly renovated Africa Hall - a landmark where the Charter of the Organization of African Unity was signed by the continent's founding fathers.

This hall embodied their vision of a strong, self-reliant and prosperous Africa, freed from the shackles of colonialism.

But our continent has substantially changed since then.

Today, we confront different challenges that pose serious threats to our collective progress and demand yet another unified response.

From the COVID-19 pandemic to geopolitical tensions and economic downturns, our economies are being stretched to their limits.

Africa now faces a financing gap of up to USD1.3 trillion annually to meet its sustainable development goals by 2030.

These crises have also brought us to a critical point.

As of 2023, the continent's external debt exceeded USD 1 trillion with extremely high annual interest payments - in effect, limiting our ability to fund essential development.

Over the last few years, the number of impoverished people on the continent has risen sharply and expected to reach 476 million this year, as 149 [1]million previously non-poor people, have slipped into poverty, largely due to the escalating impact of climate disasters.

And the current global financial system, unfortunately, is failing to meet Africa's needs.

To put it simply, without immediate action, we risk falling short of achieving the 17 SDGs by 2030.

The question now is: how do we address this crisis?

The time has come to overhaul our financial architecture and reform it into one that fairly represents and responds to the needs of developing nations, and champions financial stability for Africa's development.

Africa needs a financial system that prioritizes the Sustainable Development Goals, AU Agenda 2063 and climate action, and leverages both concessional finance and robust domestic resource mobilization to chart a new path forward.

To this end, I propose five actionable steps to guide us to realize this vision.

First, Africa needs tax reform for resilience.

We must broaden our various countries' tax base, strengthen compliance mechanisms, and embrace digital technologies to ensure revenue collection is both efficient and effective.

Africa's current tax-to-GDP ratio, at 15.6%, lags behind other regions.

However, increasing this ratio by even a few percentage points could unlock billions for sustainable development.

Second, the use of tax incentives must be targeted and reviewed periodically.

We must ensure that the incentives offered to companies deliver genuine benefits to communities, jobs and our economies.

Third, it is crucial that we combat revenue leakages through better controls on illicit financial flows.

Recent trends in digital assets and crypto-assets are creating new avenues for tax evasion.

But we must strengthen measures against these practices in order to retain the capital needed for our development.

Fourth, it is essential for Africa to have immediate relief on debt service.

Revising the G20 Common Framework to include fast-tracked restructuring procedures will go a long way to enable African countries to manage debt sustainably.

Additionally, extending the Debt Service Suspension Initiative (DSSI) will offer breathing space for economies in distress.

Finally, rechanneling Special Drawing Rights (SDRs) to Multilateral Development Banks (MDBs) would inject the much-needed liquidity into African economies, support their growth and help them weather external shocks.

Distinguished Delegates

Ladies and Gentlemen,

With Africa's debt-to-GDP ratio among the highest globally, and growing poverty exacerbating this, we must approach the Fourth Financing for Development Conference in Spain next year with a united voice and a clear agenda.

Let us not forget the strength of data in driving home our call for change.

Africa's current financing needs speak for themselves, and it is through collective advocacy that these numbers will shift.

The Pact for the Future offers an opportunity to solidify trust between the Global North and South by championing equitable reforms to the global financial architecture.

The reforms we advocate for today, such as fair credit ratings and greater liquidity support, will set the stage for Africa's development.

I am confident that this consultation can serve as the platform to craft Africa's unified stance.

And the Economic Commission for Africa remains ready to support our collective aspiration for a prosperous Africa.

Thank you for your attention.

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