Experts Call for Global Financial System Adjustments to Better Address Africa’s Specific Needs.

Addis Ababa: Experts at the Second Session on the Committee on Economic Governance in Addis Ababa, Ethiopia, have called for adjustments to the global financial system to better address Africa's specific financial needs, including better access to concessional financing. Continued multifaceted global crisis in coming years, the experts say, implies a continued need for various fiscal support measures for the continent.According to Ethiopian News Agency, in her opening remarks at the committee meeting, Zuzana Schwidrowski, ECA Director of the Macroeconomics, Finance and Governance Division, emphasized that Africa needs to have a unified voice in the global financial governance to address the structural issues that hinder the mobilization of financial resources. She stressed the necessity for Africa to strategize, advocate, and engage actively to ensure unique needs are addressed, particularly the complex crises Africa is facing, including the impact of the post-COVID-19 pandemic, climate change, geopolitical tensions, and conflicts.The committee meeting was held ahead of a regional review of the Fourth International Conference on Financing for Development, scheduled for 18-19 November 2024 in Addis Ababa. The Committee is expected to provide evidence-based advice and guidance on economic governance issues related to the promotion of sound macroeconomic management and inclusive development strategies, and the enhancement of financial integrity issues, such as combating illicit financial flows in Africa.Discussions at the meeting will also aid in the preparations towards the Fourth International Conference on Financing for Development set for 30 June to 30 July 2025 in Serville, Spain. Gamal Ibrahim, Chief of the Economic Governance and Public Finance Section Macroeconomics, Finance and Governance Division, ECA, highlighted the historical inequalities in international taxation laws that favor international corporations based in the north with outdated principles.Ibrahim noted that multinational corporations h ave manipulated financial growth to minimize tax liabilities through mechanisms like transfer pricing. Although an inclusive framework was introduced in 2015 to address these issues, African countries face challenges in capacity and negotiation complexity. He underscored the necessity for capacity building and monitoring, which are crucial for the effective implementation of the UN Framework Convention on International Tax Cooperation, aimed at enhancing the efforts of developing countries to expand their fiscal space.Attention areas would include provisions for fair allocation of tax rights, addressing tax-related illicit financial flows, and effective tax information exchange. In her presentation on Issues and Challenges of Financing for Sustainable Development in Africa: Priorities for Africa for the Fourth International Conference on Financing for Development, scheduled for 2025, Schwidrowski highlighted the worsening situation of Africa's development, with millions deprived of basic needs and quality o f life.She pointed out that the number of food-insecure people in Africa is as large as it was in the mid-2000s, and the average tax to GDP ratio is still below pre-pandemic levels, with a proposal to raise it through wealth and property taxation. Schwidrowski stressed the importance of Africa advocating consistently to avoid being left behind in global development aid.Public funding, private investment, remittance, and borrowing are other potential sources, with underutilized public-private partnerships and their potential benefits. She also highlighted the importance of effective debt management and the political commitment to enhance domestic resource mobilization, noting that digital tax collection systems and taxing the digital economy present opportunities for Africa.