Financing Sustainable Development in Africa

Uchenna R. Efobi, Simplice Asongu, Uchenna R. Efobi, Simplice Asongu

• Publisher: Palgrave Macmillan
• Year: 2018
• Print ISBN:
  9783319788425
• eBook ISBN:
  9783319788432
• Topic: Economics
• Subtopic: Finance
• Index: Economics

Part IFinancing in Africa for Sustainable Development

© The Author(s) 2018

Uchenna R. Efobi and Simplice Asongu (eds.)Financing Sustainable Development in Africahttps://doi.org/10.1007/978-3-319-78843-2_2

Begin Abstract

Financing Mechanisms African Governments Should Pursue in Financing Sustainable Development in the Next 20 Years

Nomahlubi Nkume¹

(1)

School of Governance, University of the Witwatersrand, Johannesburg, South Africa

JEL Codes

F3B1D6H1

End Abstract

1 Introduction

This paper begins by providing a definition for sustainable development in Africa . In doing this, I offer a lens through which financing options should be viewed in the continent in order to achieve robust and more inclusive development . I subsequently give an overview of traditional methods of financing followed by the challenges these modes of financing face. I then present three mechanisms for financing sustainable development . Finally, I present a financing model and the role of local government in financing development in Africa .

The last two decades have seen much work globally to construct a universal definition for sustainable development . The gains achieved over the years in redefining development (that is more robust than economic growth , and increases in GNI) towards a more inclusive term that incorporates HDI has resulted in the birth of a widely used definition for sustainable development . The World Commission on Environment and Development defines sustainable development as, “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (WC Development 1987). This definition contains two key concepts within it. “They include the concept of needs, in which priority should be given to meeting the needs of the poor; and the concept of limitations, imposed by the state of technology, and social organisation on the environment’s ability to meet the current and future needs” (WC Development 1987). This remains the most commonly used definition in conceptualising sustainable development . The United Nations, OECD, African Union (AU) and the African Development Bank (AfDB) all use the above definition in conceptualising sustainable development in their specific context and policies.

It is both shocking and worrisome that Africa ’s key development organisations (African Union, and the African Development Bank) do not have their own definition for sustainable development , despite the peculiar context and specific structures of African economies. For example, certain words contained in the sustainable development by WC Development (1987) have different meanings in Africa . The use of the word “poor”, in the idea that sustainable development should meet the needs of the poor should be considered contextually. Some important issues to be considered include: (i) “who is the poor in Africa ?”, “is it the man without access to finance ?” “is it the man who finds himself having to abandon his traditions in order to embrace globalization?” “is it the smallholder who makes less than a dollar a day?” Though the World Bank has a standard definition of the poor (individuals living on less than $1.90 a day), it is important to contextualise the definition of the poor to enhance relevant policy recommendations, and (ii) the concept of “limitations” is so vast in Africa and requires unbundling. This implies that the definition of limitations in the context of Africa masks some important information that warrants more enquiry. In this paper, I propose a working definition that can be taken up by development organisations that are targeted at African issues like the AU, AfDB and other African policymakers. The definition therefore is:

Sustainable development in Africa means development that ensures marginalised individuals and communities are granted access (financially, educationally, etc.) to participate in the economy in a manner that ensures their future generations remain active participants in the economy, while preserving cultural practices in a manner that respects the need to preserve the environment for future use.

This study, therefore, proceeds with this definition and critically examines the finance option for such development . The chapter proceeds by discussing the traditional sources of financing sustainable development , which is immediately followed by the discussion on the changing global context and challenges that are faced by the traditional sources of financing such development . The fourth section is focused on suggesting some pragmatic solutions for financing sustainable development in Africa based on the working definition proposed above. The fifth section includes a discussion on the role of the local government in driving the pragmatic definition of sustainable development provided in this study. The conclusion and policy recommendations are included in the sixth section.

2 Traditional Sources of Financing Sustainable Development in Africa

This section is a brief overview of the most commonly used traditional sources for financing development in Africa . The section also considers the situation of Africa in terms of how Africa has been faring with regard to the identified funding. The section also succinctly looks at the criticisms of these types of financing for development on the continent, specifically looking at Official Development Assistance (ODA).

Development in Africa has previously been financed by huge funds from the public sector. This has been the case for many decades, and only in the last decade was there a rising shift in discourse, that is aiming to...

Table of contents

• Cover
• Front Matter
• Introduction
• Part I. Financing in Africa for Sustainable Development
• Part II. Domestic or Foreign Investment for African Development
• Part III. Human Development in Africa for Sustainability
• Part IV. Industrial Development in Africa for Sustainability
• Back Matter