Carlos Lopes (PhD)

World leaders are coming to Africa at a time when the continent is no longer a beggar

Carlos Lopes (PhD) UN Under Secretary-General, Executive Secretary, UN ECA

Carlos Lopes (PhD), UN Under Secretary-General and the eighth Executive Secretary of the UN Economic Commission for Africa (UNECA), is a well-known global thought leader in African development. Assuming his current position at the UNECA in 2012, Lopes previously served as Executive Director of the UN Institute for Training and Research in Geneva and Director of the UN System Staff College in Turin, Italy at the level of Assistant Secretary-General. His active contribution in research concerning development issues, his experience teaching at top-notch universities in Africa, Europe and Latin America, as well as authoring and editing 22 books have prepared him well for research- and development-oriented leadership.
Now, Lopes has his eyes fixed on the 3rd International Conference on Financing for Development, which will take place from 13 to 16 July, 2015 in Addis Ababa. The success of the Conference will play a key role in the adoption and subsequent implementation of the Sustainable Development Goals (SDGs) following the September UN Summit in New York as well as the climate agreement under the UN Framework Convention for Climate Change that will be held in Paris in December.
Lopes is hopeful that Africa will take advantage of the current momentum towards the Agenda 2063, an initiative that aims to achieve the African Union’s vision of “an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena”.
In connection with the Conference, EBR’s Amanyehun Sisay, spoke with Lopes about ongoing development challenges in Africa, the continent’s interest to be defended at global forums and about what he expects from global leaders coming to Addis Ababa. He says that Africa now is at the negotiating table for a meaningful conversation about global development agendas in which the continent has interests to defend, resources to mobilize and development capabilities to provide. He says that the continent, more united than ever before, is uniquely positioned to seize opportunities that it previously didn’t have.

Let us begin with the conference that is going to be held in Addis Ababa from July 13-16, 2015. How will it contribute to the African Agenda 2063, a strategy to optimize the use of Africa’s resources for the benefit of Africans?
Africans have started a process of defining their future after celebrating the foundation of the OAU [Organization for African Unity] and that of the AU [African Union] in 2013. This has been done in different ways, including the establishment of Agenda 2063 as well as a number of other frameworks, such as how Africans should engage in universal negotiations that involve their future.
With the Millennium Development Goals (MDGs) coming to an end this year, the world is in the process of defining the future development agenda for the next 15 years and part of that process is the conference that will be held in Addis Ababa.
Africans have started preparing for this some time back with the establishment of a high-level committee chaired by President Ellen Johnson Sirleaf of Liberia. Ethiopia is a member of that committee and Prime Minister Hailemariam Desalegn has been participating in the meeting of the committee that defines how African interests should be defended [in the global fora].
One of the various contributions were the definition of Sustainable Development Goals (SDGs) that are going to be crystallizing in terms of decisions during the month of September in the special session of the UN General Assembly [in New York]. But we need also to [know] how we are going to fund it and how we are going to finance all the ambitions that we have.
For instance, during the Rio+20 conference on climate that was held in 2012, participants from the private sector, NGOs and other groups came together to shape how we can reduce poverty, advance social equity and ensure environmental protection on an ever more crowded planet. For these, we need money, resources and to engage processes that are dissimilar.
So that is why this conference is so crucial. It is actually the most important conference ever on financing for development.
Do you think this interest of Africa will be taken into consideration during this conference?
Well, Africans have a couple of very important issues they want to be addressed. One of them is to shift the debate from just development aid to a larger scale that includes issues such as how they deal with taxes, illicit financial flows, climate financing and increasing investment. So for all these, Africans have developed a lot of reflections [and] contributed a lot of ideas and most of them are being taken into account.

Beyond taking into consideration the interest of Africa, how relevant is this conference in terms of shaping the post-2015 global development agenda?
Africans require a lot of money to bring structural transformation. We defined structural transformation as moving into industrialization. If we are moving to industrialization, we need better agricultural productivity, we need to expand the manufacturing sector and we need to formalize the service sector.
We are not going to be able to do that without good infrastructure [or a] sustainable supply of energy. We are not going to able to do that without good financing.
When we are looking into our gap of financing, it is quite huge. Just on [the] electricity front, we need almost USD50 billion a year, which is as much as we get from development aid. So as you can see we are not going to make it just with aid [only], it has to be about foreign direct investment and domestic resource mobilization. These are the key ingredients that are going to make a difference.
So, the question is how do you mobilize resources domestically? It is by increasing saving and making sure the economic opportunities are expanding for the private sector. When ports are expanding, more investors come and therefore you will be able to actually fund the gap that we are witnessing right now.
The good news is that Africans have a lot of money in different pockets that have not been used productively. So we need to be sure that we put in place different incentives for this to happen. For instance, we have a lot of money in central banks’ reserves. The continent has a lot of money in the form of illicit financial outflows that is not properly regulated. We also have a lot of money in the pension funds and from the Diaspora in the form of remittances that is not used productively. So all this available wealth will liberate a lot of resources for Africa’s needs and they should be complemented by the external partners’ contribution as well.

Do you think Africa has the right leadership to have these interests implemented?
This discussion was not happening three years ago, so it has now begun to be put at the center of [the] discussion. There were two meetings of African central banks’ governors about the issue of reserves that did not happen before. We had huge discussions and research done about how to increase [the] taxation level in Africa, [which] is one of the lowest in the world.
So Africa has the money to do things like infrastructure. The discussion about funding infrastructures has involved new vehicles that did not exist before and the programme for the infrastructure development in Africa has now identified ten key projects for the future and all of them are in the stage of implementation. So in the past three years very important developments [have been] taking place, which are quite exceptional.

Talking about the role of the private sector in development, many African countries are at the bottom of the ease of doing business index. In Africa, incentives given to the private sector are usually limited to duty-free import of machinary or tax reliefs. But there are bigger issues that should exist to make Africa better for the private sector. Do you see these happening in Africa?
The ease of doing business index is [a] very important indicator but it is not the only ingredient that will give us the context of the business environment. Let me give you some examples. Eight African countries are ahead of Russia in the index, eleven African countries are ahead of India and about eight countries are ahead of China. But, because they are ahead in the index, it doesn’t mean that [they are] going to attract more investment. This is because size matters and a number of other characteristics do matter as well.
So if African countries do not integrate regionally, it is going to be very difficult to attract certain type[s] of investments. It is very good to do a lot of reforms like what Rwanda did. Rwanda is the champion of reforms. The country does improve most in terms of percentage in the index but that is not enough because that is a small economy. Africans should integrate to be attractive enough. Otherwise we are not going to compete with giants and we are going to stay behind.
So yes, we need to create a space for the private sector that [is] attractive at the national level, but also we should integrate at the regional level. That is why trade negotiations and regulatory frameworks are important.
For instance, some of the most value addition in the African economy is coming from service sector such as banking and telecommunication. These are developing very fast. The big banks in Africa are pan-African, the big telecom companies are pan-African, and they are just showing the way we have to do it on a much larger scale. Ethiopian [Airlines] is doing it in [the] aviation industry. So we really need to have these champions that are going to stress from the reality of the center to become much integrated and therefore much more attractive for the private sector.

As much Africa’s development depends on its partnership with the rest of the world, the continent has to improve its governance too. But here again, most African countries are at the bottom of Transparency International’s transparency index, which affects the development within and assistance coming from overseas.
I love discussing governance and accountability. But I hate [the] transparency index. The reason is that because in the transparency index any facts and perceptions are based on interviews with the business community that is not even based in Africa. It is basically based anywhere else. And therefore what you have on the index is basically the opinions of the main stream views of American, Europeans and others. Obviously their views about Africa are known.
So, it is not going to be a surprise that African countries find themselves at the bottom. I think we should…look at the issues of transparency more from our perspective. The African perspective is more…about illicit financial flows because that is the real corruption; not this little, small and petty corruption that are really hurting the continent. It is how we sign contracts with mining companies that are not in the best interest of the continent. It is about transferring pricings by multinational companies. So these are the kind of issues that are very important for Africa.
Look at the Mo Ibrahim Index, the most comprehensive index on what governments do, year and after year Africa is making progress in a range of indicators that [are] isolated with anecdote[s]. So we have to look to the continent as a whole and that as a whole is in a progress. In fact it is very easy to explain the progress on the economy side because Africa has the least debt in the world right now in relation to GDP. It had an all-time record on reserves until the oil price and commodities started to decline last year. It has an inflation rate that is a single digit and so on and so forth. That is macroeconomic governance. And these are pretty good things.

What are you expecting from this conference?
My main expectation from this conference is that it will create the right environment for negotiation. We have three topics to negotiate with partners: financing, [the] Sustainable Development Goals and then climate. The climate conference that will be held in Paris this September is going to be crucial because we have been postponing a new agreement on climate for a long time and it has far-reaching implications for Africa.
We are the first region in the world that has the possibility of powering its manufacturing sector fuelled by renewable energy. Africa can do green industrialization and step ahead of everybody else in that regard. So whatever is discussed, the conference in Paris is extremely important for the future of Africa’s industrialization.

World leaders are coming to Addis Ababa; do you have a message to them?
The main message is that the leaders are coming to Africa to discuss financing for development at a time when Africa is no longer a beggar. Africa is a very key player in terms of the future of humanity because of its demographic size and because of the empowering capacities that have been demonstrated by Africans. But more importantly, it is because Africa is the fastest growing region in the world. EBR

3rd Year • July 16 – August 15 2015 • No. 29

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