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Prof. Mucavele stresses the importance of mobilising resources

NEPAD Dialogue - Focus on Africa
Issue 115 - 02 November 2005

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Prof. Mucavele stresses the importance of mobilising resources

Mobilisation of resources is crucial for the successful implementation of NEPAD, said Prof. Firmino Mucavele, Chief Executive of the NEPAD Secretariat, in a presentation to the Zambia NEPAD Action Plan workshop held in Lusaka on 26-28 October 2005. In an overview of NEPAD, he said Africa needs to mobilise additional resources, both domestic and foreign, to achieve higher levels of growth and more effective reduction of poverty.

“Financial domestic resources include national savings by firms and households, which need to be substantially increased. In addition, more effective tax collection is needed to increase public resources, as well as the rationalising of government expenditures.

“A significant proportion of domestic savings is lost in African countries as a result of capital flight.

“Estimates suggest that, in the year 2000, Africans held up to US$400 billion of their assets outside Africa. This was equivalent to the size of Africa’s debt or 92 percent of GDP.

“Conditions of peace, security, and sound political and economic governance, as well as the development of effective financial markets and the creation of attractive economic opportunities, form the basis of any approach to attracting this capital back to Africa.

“Therefore, there is an urgent need to improve judicial conditions conducive to private sector investments by both domestic and foreign investors”.

Professor Mucavele outlined the major sector priorities of NEPAD as follows:
* Agriculture, including food security and market access;
* Infrastructure development including transport, energy, information and communication technology, water and sanitation;
* Human resources development including education and health;
* Environment and tourism;
* Culture; and
* Science and technology development.

“Improvement in agricultural performance is a prerequisite of economic development in Africa. The resulting increase in rural people’s purchasing power will also lead to higher effective demand for African industrial goods. The induced dynamics would constitute a significant source of economic growth.

“Productivity improvement in agriculture rests on the local government or municipality. A key constraint is climatic uncertainty, which raises the risk factor facing intensive agriculture based on the significant inflow of private investment.

“Consequently, government must support the provision of irrigation equipment and develop arable lands when private agents are unwilling to do so. The improvement of other rural infrastructure such as roads, rural electrification, is also essential”.

Professor Mucavele said that while the role of infrastructure is well recognised at the national level, at local government or municipality level there is lack of capacity for infrastructure planning and financing of projects.

“NEPAD is suggesting the principle of subsidiary, where infrastructure activities within the national economic space remain the purview of the governments concerned. The national Infrastructure program must be a result of local government involvement.

“At the regional level, NEPAD’s primary role is to promote, to facilitate and to monitor the development of regional infrastructure activities.

“A secondary role for NEPAD is to help to put in place the structures, institutional capacity and financing that will be necessary to meet Africa’s Millennium Goals and to promote the harmonisation of policies and regulation, even though these activities will, in fact, be undertaken at the national level.

“The concept of regional infrastructure is important because African economies are typically too small to generate the economies of scale that can be found in larger markets. Thus, transaction costs are high and competitiveness is low.

“The potential for reducing transaction costs and increasing competitiveness through the sharing of the production, management and operations of infrastructure facilities and through hubs, development corridors or poles is immense.

“Opportunities for shared facilities are obvious in the cases of trade, in electricity and gas. They also exist in the areas of water resource management, railways, telecommunications and even universities and training centres”.

The Professor said economies of scale can result from both the physical provision of infrastructure and the associated operations and services.

“It is estimated that pooling electricity generation facilities in Southern Africa could generate savings for Southern Africa of US$80 million per annum in operating costs and US$700 million in expansion costs over the next 20 years.

“Creating air transport hubs could eliminate the need for costly airport construction. Creating multi-country telecommunications markets would encourage the private sector to invest in the latest technology to replace current out-dated systems”.

He said information and communication technologies (ICT’s), driven by the convergence of computers, telecommunications and traditional media, are crucial for the knowledge-based economy of the future.

“Rapid advances in technology and the diminishing cost of acquiring the new ICT tools have opened new windows of opportunity for African countries to accelerate their economic growth and development”.

He described human development as one of the most serious casualties of the poverty, social exclusion and marginalisation of Africa.

“The health problems facing Africa are rooted in the lack of human development. African people continue to suffer from a huge burden of potentially preventable and treatable diseases, which not only causes volumes of unnecessary death and suffering, but also stifles economic development and damages the continent’s social fabric.

“Securing the health system is critical to combating major diseases. Prevention of diseases and health promotion measures, such as immunisation and contraception also benefit from effective health systems.

“Central to any effective system is sufficient numbers of capable and committed health workers, particularly so in more remote and unstable areas”.

Professor Mucavele said an important challenge for Africa is the promotion of social and economic development of its countries.

“Globalisation places new and additional pressures upon African countries to interact internationally with each other, both within their own regions and on a wider global stage. The increasing prevalence of corruption, injustice and lack of respect for human rights in Africa constitutes a threat for the successful implementation of NEPAD.

“Deepening Africa’s integration into global markets requires naturally good government, good judicial and uncorrupted financial systems and policies”.

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