The Mo Ibrahim Foundation has released a new report titled “Financing Africa: Where is the Money?” which offers an in-depth analysis of the financial needs required for Africa to achieve its development and climate goals. The report highlights that while resources largely exist, their effective allocation is hindered by inefficient processes and, in the case of domestic resources, by dormancy or misuse.
Mo Ibrahim, Founder and Chair of the Mo Ibrahim Foundation, emphasized the need for a paradigm shift in financing Africa. “This is not about Africa coming to the developed world with a begging bowl and developed countries considering how much more they can pledge. This is about smarter money, not just more money,” Ibrahim said. He stressed that the resources are available, but current processes must be reformed to address challenges effectively. He also called for improvements in the international financing system, African debt structuring, risk assessment, mitigation, and aid conditionalities. Ibrahim underlined the importance of good governance to ensure assets are leveraged for the benefit of the people.
The report identifies the significant yet often inconsistent figures related to Africa’s development and climate goals. It highlights the critical need to balance climate finance and development finance to avoid forcing African nations to choose between population development and environmental sustainability.
Financial contributions from non-African sources are also analyzed. Official Development Assistance (ODA) accounts for nearly 10% of the continent’s financial resources. However, ODA from Western donors is primarily directed towards health and education and often comes with specific conditionalities. Meanwhile, commitments from non-DAC countries to Africa are steadily growing and better addressing the demand. The report warns that debt is not a sustainable solution, as stock and servicing costs have tripled since 2009, making traditional relief efforts ineffective. Issues such as inadequate African risk assessment, IMF surcharges, and dormant ODA funds are also highlighted.
Africa’s domestic resources are identified as a significant potential source of funding, which should cover between 75% and 90% of the needs to finance Agenda 2063, according to the African Union. However, these resources are often underutilized or misused. The report suggests that preventing leakages through Illicit Financial Flows (IFFs) could increase resources by up to $100 billion annually, surpassing the $81 billion received in ODA and the $97 billion sent back in remittances annually. Strengthening tax systems is seen as a quick win, as Africa lost $46 billion in corporate taxes due to tax incentives in 2019, more than half of the ODA received. Leveraging remittances, sovereign wealth funds, pension funds, and private wealth, as well as monetizing Africa’s green assets, are also highlighted as potential financial resources, provided that good governance is ensured.
This report is a product of the Ibrahim Governance Forum, part of the Ibrahim Governance Weekend, which is held annually in a different African country. Although the IGW 2024, scheduled to take place in Nigeria, was cancelled due to unforeseen circumstances, contributions from expected speakers and panellists are incorporated into the final report.