By: Lloyd Evans
The Managing Director of the International Monetary Fund (IMF) Madam Christine Lagarde has expressed her disgust of the level of corruption currently going on in most African countries.
She said in some countries in Africa, the rents and revenue from extractive industries are captured by just a few depriving the rest of their people the needed standard of living.
The Managing Director declared “Mining can account for an important share of output and export earnings, but often contributes relatively little to budget revenues and job creation. This corrodes the fabric of the economy and its social cohesion”
Madam Lagarde was speaking at an international conference on Africa in Maputo, Mozambique. The high level conference was on the theme “Africa Rising: Building to the Future”.
The two-day conference brought together finance ministers, policymakers, the private sector, and civil society from sub-Saharan Africa and beyond to discuss the challenges facing the region as it builds upon the strong economic gains made since the 2008 global economic crisis. Ghana was represented bt Mr Seth Terkper Minister for Finance and officials from the Bank of Ghana.
To halt the level of corruption in Africa, Madam Lagarde called for the strengthening of institutions and governance frameworks that manage these resources and pointed out that transparency can help increase accountability—and help ensure that these resources are harnessed for the benefit of all.
She said some countries have taken steps in this direction and cited Sierra Leone and Uganda for setting new fiscal rules in anticipation of large resource flows.
She said Côte d’Ivoire has also implemented a new legal framework for the mining sector that would help attract higher foreign direct investment.
Touching on capacity building, she said , “Africa’s greatest potential is its people. They are the key for the region to fully capture the dividends from population growth. By some estimates, a one percentage point increase in the working age population can boost GDP growth by 0.5 percentage points”.
For this to happen Madam Lagarde said, “good jobs need to be created in the private sector. Today, only one in five people in Africa finds work in the formal sector. This must change. With wider access to quality education, healthcare and infrastructure services need to be improved”.
Similarly, technology can be tapped to extend the reach and access of financial services to millions of people. Here, Kenya’s experience offers valuable lessons to the rest of the world on how to empower the poor through financial access, she stated.
She said by combining mobile banking with financial services provision, 75 percent of Kenya’s population now has access to financial services. Crucially, it is the poor that have benefited the most from this expansion.
On gender issues Madam Lagarde said “most of the women in Africa cannot afford not to work. But when they do, they are mostly employed in informal activities. We all know what this means: low productivity, low incomes, low prospects. We also know the constraints: access to education, credit, and markets”.
The gains to be made by overcoming these constraints are immense—particularly through girls’ education. By some estimates, the economic loss in developing countries from the education gap between girls and boys could be as high as $90 billion a year—almost as much as the infrastructure gap for the whole of Sub-Saharan Africa, she stated.
She said “the opportunities are vast and the challenges, while significant, can be overcome through sustained strong policies, both economic and social.
“Now is the time to go further—to work together towards an inclusive, job-rich and sustainable growth strategy. Now is the time to extend the gains that many countries have enjoyed to those that have been left behind by helping them overcome fragility and build strong institutions”
The writer is the former Editor of Graphic Business