Sustainable Development

by Developed Africa 13. January 2014 09:00

It appears that the main source of funding for African countries has changed, and the continent needs to adapt to ensure these sources can be harnessed to correctly achieve sustainable development. 

A report from Africa Growth Initiative has explained how the main external funding for African countries is now coming from the combination of private capital flows and remittances; overtaking official development assistance, or aid. 

The growth in external resources has the potential to complement domestic resources to achieve sub-Saharan Africa’s ambitious transformational strategy."

The report depicts a plan for how African countries should harness this resource:

FDI flows will benefit more long-term economic growth in sub-Saharan Africa if they are associated with a transfer of knowledge and skills from multinational companies to the domestic private sector"

In other words, instead of just passively receiving the help from FDIs, there should be an interactive exchange so that African countries can learn from them and gain knowledge for the future when they will hopefully not need FDIs.

Another key action that they recommend with regard to FDIs is to properly ensure a reduced number of illicit financial flows; to be encouraged by legislation.

Their next two recommendations involve creating and maintaining strong relationships with important groups. Ensuring continued investment and support for the BRICS countries who are now some of the top countries investing in Africa; and engaging the diaspora further through lowering the cost of sending remittances- but also the areas which remittances reach also need to be looked at, and widened.

And finally, they discuss the implication of aid, and the possibility of using aid to attract private investment, and to use a combination of the two for development projects, if necessary. 

The infrastructure sector offers a number of opportunities in this regard. The large and long-term financing needs of infrastructure projects can require different types of financiers, including private sector, bilateral and multilateral partners."

Altogether, this analysis makes a sounds plan for adapting to the changing nature of financial flows and to ensuring sustainable development alongside these changes.

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