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Africa Moyo, Deputy News Editor
AFRICANS need to intensify their efforts in mobilising domestic resources to finance their development needs, in the absence of affordable global funds and pressing public debt, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube has said.
In an article published on CNBC Africa, Prof Ncube said Africa has already “made significant progress” in financing its development through domestic resources in recent years.
“However, this funding is inadequate to close a widening financing gap,” he said. “To bridge the funding gap, African countries need to boost domestic resource mobilisation by increasing financial resources, improving public spending efficiency, leveraging large pension fund markets and sovereign wealth funds, curbing illicit financial flows out of the continent, and harnessing partnerships.”
Some new sources of tax revenue that need to be sought include those from digital payments, informal sector taxes and sin taxes, among others.
Zimbabwe has accelerated domestic resource mobilisation as it cannot access funding from the World Bank, the International Monetary Fund and other Western financial institutions due to sanctions.
Government has been constructing roads, dams, schools and clinics and providing clean water to communities through internally generated funds.
The 2024 National Budget focuses on investment in transport to enhance access and connectivity of various sectors of the economy and promotion of regional and international trade and high impact projects.
Notable progress has been recorded in major road building and upgrading including the Harare-Masvingo-Beitbridge highway upgrade, Mbudzi Interchange construction, Harare-Kanyemba Road upgrade and projects under the Emergency Road Rehabilitation Programme.
In total, ZiG4,2 billion was disbursed during the first six months of the year towards transport infrastructure.
Prof Ncube believes Africa must explore innovative solutions and leverage the ongoing financing for development processes to secure adequate financial and technical resources to support the continent’s participation and engagement in the tax reform process.
Deepening Africa’s capital markets for resource mobilisation would enable countries to source additional financial resources from the private sector and the pension fund industry.
Carbon credits could also help countries unlock benefits supporting sustainable development, economic growth, and climate resilience while contributing to global efforts to combat climate change.
There was scope for the issuance of green and blue bonds linked to climate change to raise additional resources for development while Africa’s significant diaspora community enabled countries to issue diaspora bonds and related instruments to raise additional funding.
Prof Ncube said sovereign wealth funds had proved to be a critical economic pillar in driving economic development in some countries.
A prosperous, inclusive and resilient Africa could be built through renewed partnerships and strong institutions, but mounting public debts are limiting the ability of countries to invest in core social services that citizens desperately need.
The average public debt in Africa was around 65 percent of GDP, amounting to US$1,1 trillion, with some countries having much higher debt levels. Nearly 40 percent of African countries are in, or at high risk of, debt distress, with 60 percent of African nations now spending more on servicing external public debts than on healthcare.
By end of June this year, Zimbabwe’s debt stock amounted to ZiG287,2 billion, consisting of external debt of ZiG168,5 billion and domestic debt of ZiG118,7 billion. The debt stock is broken down as 58,7 percent external debt and the remainder being domestic debt 41,3 percent.
Online Reporter