The challenges of mobilising finance for African development : conference of African ministers of finance

Abstract

To reduce poverty in Africa by half by the year 2015, a goal ratified at the World Summit for Social Development in 1995, will require a 4 percent reduction in the number of people living in poverty each year. The minimum requirement to achieve this will have to include an average growth rate of 7 percent per year. This in turn requires an investment rate equal to 33 percent of GDP. At the current domestic savings rates in Africa, of around an average of 15 percent and ODA of around 9 percent, this leaves a "resource gap" (investment gap) of about 9 percent. In meeting this challenge Africa and its development partners will need to work together to mobilise all types of development financing, i.e. aid, debt, foreign direct investment, and domestic finance. Furthermore, in order to cover this gap policy makers will need to take action to promote domestic resource mobilisation, reverse capital flight and attract foreign direct investment.