Future Leaders Programme 17: Financing African Economic Development

About the Future Leaders Programme (FLP) 

DLD promotes dialogue and mutual learning between the key actors that drive economic and social development – governments, private firms, civil society organizations, international organizations, trade unions, academia, and others – and that often operate in separate spheres, understanding each other poorly, even seeing each other as adversaries.  

The FLP is one of the key programmes of DLD, bringing together a small number of people who will be in leadership positions in the next five to ten years in different sectors of the development community for a workshop of lectures, discussion sessions, and debates, led by speakers with a wealth of senior experience in government, international organizations, and academia.

Financing African Economic Development 

What are feasible strategies for financing African economic development? The constraints on mobilising resources to underpin higher rates of investment that are needed for structural change across the continent are legion. At a global level, the architecture of the financial system is characterised by asymmetries and blockages: financial markets are largely driven by pursuit of short-term returns while African economies desperately need more access to long-term, ‘patient’ finance. Many potential sources of long-term finance (including pension funds and sovereign wealth funds) do not channel much towards Africa. Moreover, global financial markets are structured in ways that put African economies at disproportionate risk. 

During international financial crises, often the rules of the game lead to financial flows out of African and other low- and middle-income economies to help bail out Global North private sector firms. And African governments have very limited fiscal space to invest in structural transformation while they often pay excessive costs for foreign debt. Debt and balance of payments crises are frequent, and pitch governments into the arms of the IMF, whose models are not appropriate for the fundamental growth challenges of low- and middle-income economies.  

There is much talk of a massive ‘funding gap’ in Africa. At the same time, there are estimated to be large reserves of African savings and huge amounts of African ‘offshore’ capital: unlike, for example, East Asian ‘offshore’ finance, little of this ‘round trips’ back into investments on the continent. Can more coherent domestic production strategies attract some of that African ‘offshore’ finance? What realistic strategies may expand the role of national development banks on the continent and where are international DFIs supporting productive expansion and rising productivity? Might the New African Financial Architecture for Development (NAFAD) that is being proposed and developed within the African Development Bank begin to turn things round and help attract resources to the continent?

This Future Leaders Programme will explore a number of questions important to the development of effective strategies for structural transformation in Africa. It will:

• Debate the variations in fiscal policy experiences across the continent, with a view to teasing out possibilities of transformative policy
• Explore what policy officials, think tanks, and advisors can learn from the history and recent analysis of international debt problems
• Explain why it is important to understand the shortcomings of IMF debt sustainability analysis models and what technical improvements to these models may be appropriate
• Explore the decline of ‘traditional’ Western aid in recent years and what is and might evolve in its place

In addition to DLD Co-Directors, speakers include (alphabetically): Pritish Behuria, Richard Kozul-Wright, Christina Laskiridis, Arkebe Oqubay, Salma Seetaro, Uli Volz, Graham Wrigley, and Nimrod Zalk.