Africa Economic Symposium (AES) - 2nd Edition: Fostering Africa’s Economic Transformation through Innovative Financing

The Policy Center for the New South will organize the 2^nd edition of the Africa Economic Symposium (AES) on July 11^th-12^th, 2024, under the theme “Fostering Africa's Economic Transformation through Innovative Financing”. The Africa Economic Symposium aspires to be a continent-wide annual gathering of prominent economists, policymakers, and academics to bring together global and continental perspectives on macroeconomic management challenges and selected structural issues that shape the future of Africa's economic development.

African economies navigate a multifaced macroeconomic landscape that constrains their policy options. Despite continent-wide tightening of monetary policies, inflation remains strongly entrenched, and further escalation looms due to increasing geopolitical tensions. Furthermore, concerns about fiscal discipline in the face of rising debt and the 2024 election cycle underscore the imperative for innovative fiscal strategies.

Alongside these macroeconomic management challenges, Africa faces critical financial resources gaps amidst growing development needs, ranging from rising social demands and meeting infrastructure needs, to ensuring energy transition and fostering technological advancement. Effectively addressing these development priorities requires a comprehensive strategy to unlock financial resources coupled with robust governance reforms. Domestically, this entails strengthening public finance reforms to create fiscal space and combat tax fraud and illicit financial flows. Beyond the public sector, expanding the pool of private savings is also critical by strengthening the banking sector and local financial markets. Leveraging Public-Private Partnerships (PPPs) within a strong regulatory framework is essential to mobilize additional resources. Additionally, attracting more foreign direct investments, securing financial capital flows, and harnessing the power of migrant remittances require strategic measures to unleash the potential of external financing. The international financial community plays a pivotal role in financing Africa’s development projects by bridging financing gaps, addressing debt restructuring challenges and rechanneling Special Drawing Rights (SDRs) through Multilateral Development Banks (MDBs). 

Through the course of two days, experts, scholars, and policymakers will engage in thematic discussions on these pressing issues to share, confront and complement their views on how Africa could be positioned as the world’s new engine of growth. The AES 2024 will also provide the opportunity to present the Annual Economic Report on Africa, which maps the dynamics of the African economic profiles at different scales.


Topical Agenda

I.    Macroeconomic Policy Challenges in Africa

Session 1: Monetary Policy Challenges: Is Inflation Over?

While global financial market conditions have shown improvement and the world economy remains resilient in combating inflation, African economies continue to face challenges. Although signs of resilience are evident across the continent, with inflation rates decreasing in nearly two-thirds of African countries, inflation levels remain stubbornly above pre-pandemic levels, squeezing the most vulnerable. This scenario prompts critical questions about the effectiveness of monetary policy in curbing inflation while sustaining robust economic growth. Furthermore, as central banks in Africa have adopted tighter monetary policies, countries are grappling with the new reality of high interest rates. Future monetary policy decisions by central banks will significantly impact macroeconomic conditions and shape the nature of economic landing of African nations. Amid the current uncertain environment, each central bank decision carries implications for its credibility and financial stability, necessitating strong coordination between monetary and prudential policies.

- How did African central banks navigate the delicate balance between maintaining economic growth and taming inflation?

- What sort of economic landing is expected for African countries?

- How would African countries adapt to the new reality of high interest rates, transitioning from an era of easy money to one of fair money?

- What are the implications of monetary tightening on financial stability, and how can prudential policies mitigate associated risks?

Session 2: Addressing Fiscal Discipline.

The current economic context in Africa is marked by a persistent rise in vulnerabilities, particularly those related to increasing debt. Projections from the International Monetary Fund indicate that the region's public debt-to-GDP ratio is expected to increase of over 10 percentage points in the next five years. This trend raises serious concerns about the ability of African nations to prevent the risk of over-indebtedness while maintaining rigorous fiscal discipline. This task is even more difficult in a political context marked by upcoming elections in many African countries, where pressures for increased spending and popular initiatives risk undermining economic stabilization efforts. Faced with such challenges, it becomes imperative to rethink budget management on the continent by promoting greater discipline and rigor. These are essential conditions for ensuring long-term sustainability and meeting the continent's development objectives. The development of medium-term budget planning strategies is a crucial step. Exploring the potential of sovereign wealth funds and fiscal rules as budget stabilization mechanisms is also essential. These tools can provide a clear framework for sustainable fiscal policy and help mitigate economic shocks.

- How can African governments navigate the pressure for increased spending during election cycles?

- How can African governments balance the need for increased spending on social programs, infrastructure development and climate with the need for fiscal discipline?

- How can African nations improve their debt management strategies to ensure long-term fiscal sustainability?

- What innovative tools and technologies can be used to improve budget transparency and accountability in Africa?

II. Theme of the Year: Fostering Africa’s Economic Transformation Through Innovative Financing

Session 3: Navigating Financial Resource Limitations Amidst Growing Economic Development Needs

Africa faces critical financial resources gaps amid growing development needs. From building essential infrastructure and fostering technological innovation to ensuring a just transition to renewable energy and meeting the social needs of a growing population, the imperative for financial resources to navigate these complexities and drive development progress is becoming increasingly urgent. Mobilizing financial resources from both domestic and international sources is critical to support investments in renewable energy infrastructure, social programs, and technological advances. However, financial development alone is insufficient. Effective governance plays an equally important role in maximizing the impact of financial resources. Transparent and accountable governance frameworks ensure efficient allocation of resources, minimize corruption, and optimize investments in critical areas such as renewable energy, infrastructure, and human capital. This session will explore key aspects of sustainable development in Africa as financial resources become increasingly scarce.

- What are the foremost development challenges facing Africa?

- How can Africa's financial landscape be reshaped to address these challenges in a more inclusive manner?

- What policies and initiatives can be implemented to enhance governance and maximize the role of finance in addressing Africa's development challenges?

Parallel Session 4: Innovative Financing Mechanisms for Green Transition

To achieve Africa's green transition by 2030, a significant amount of $3 trillion is required, which is much higher than the current global climate spending of $600 billion. Meeting the sub-Saharan energy access gap alone requires an annual investment of $20 billion. To bridge the financing gap, innovative financing mechanisms need to be unlocked. These methods include mobilizing private capital through green bonds and impact investing, maximizing public resources with grants and guarantees, empowering communities with microfinance and carbon credits, and harnessing technology to improve transparency and incentives. This session explores the current burdens that hinder the use of innovative financing mechanisms in Africa, the role of the private sector in supporting the financing of green transitions, and how efficient collaboration between the private and public sectors can unleash the potential of innovative mechanisms that combine resources mobilizing return and risk mitigation.

• How can innovative financing models be developed to address the unique challenges of funding green energy projects in Africa?
• What incentives or mechanisms could be implemented to encourage greater private investment in sustainable projects across the continent?
• In what ways can green bonds and microfinance be expanded and utilized on a larger scale throughout Africa?
• What regulatory frameworks and policy incentives are required to facilitate the adoption and successful implementation of impact investing across various sectors in Africa?

Parallel Session 5: The Role of Development Finance in Addressing Social Challenges

Development finance plays a pivotal role in shaping inclusive and sustainable development outcomes in Africa. This session will delve into the multifaceted relationship between development finance and social dimensions of progress across the continent. As African countries strive to achieve inclusive growth and address pressing social challenges, understanding the impact and effectiveness of development finance is paramount. Over the years, development finance interventions have aimed to foster economic growth while addressing social disparities. However, the effectiveness of these initiatives in improving social indicators such as poverty reduction, healthcare access, education outcomes, gender equality, and social inclusion warrants critical examination. This session will explore how development finance can be harnessed to amplify social impact and advance inclusive development agendas in Africa.

- How can development finance strategies be tailored to effectively address poverty alleviation and promote equitable access to essential services across diverse African populations?

- What innovative approaches exist for integrating gender-sensitive perspectives into development finance initiatives to empower women and enhance gender equality outcomes?

- How can African governments and development partners leverage finance to strengthen education and healthcare systems, particularly in underserved communities?

- What are the key challenges and trade-offs in prioritizing inclusive development goals alongside economic growth objectives within the framework of development finance?

Session 6: Unlocking Domestic Financing Potential

Unlocking Africa's domestic financial potential necessitates a multifaceted approach encompassing various key strategies. Strengthening the banking sector and local financial markets is paramount to mobilizing private savings and directing them towards productive investments. Concurrently, reforming public finance can play a pivotal role in expanding fiscal space and optimizing the allocation of public resources, fostering an environment conducive to sustainable growth. Vigilant monitoring of tax fraud and illicit financial flows is essential to safeguarding revenue streams and ensuring transparency. Moreover, leveraging Public-Private Partnerships (PPPs) within a robust regulatory framework, emphasizing stringent monitoring and transparency, can facilitate infrastructure development and spur economic progress. Finally, maximizing the financial potential of sovereign wealth funds presents a significant opportunity for funding development initiatives and bolstering long-term economic resilience. By addressing these pillars comprehensively, Africa can unlock its domestic financial potential and pave the way for inclusive prosperity.

- How can African nations effectively strengthen their banking sectors and local financial markets to mobilize private savings and channel them into productive investments, considering the diverse economic landscapes across the continent?

- In what ways can public finance reforms be tailored to create more fiscal space and ensure efficient reallocation of public resources, and what are the potential challenges in implementing such reforms amidst competing priorities and resource constraints?

- How can African governments enhance their capacity to monitor tax fraud and illicit financial flows, and what collaborative efforts are needed at both domestic and international levels to combat these challenges effectively, while ensuring transparency and accountability in financial transactions?

Session 7: The Role of International Financing in Africa's Development

Africa is facing pressing financial needs to reach its development goals. The continent is also severely exposed to climate change and will require massive investments in climate adaptation and mitigation projects. This situation is exacerbated by elevated levels of debt and risks of debt distress, consequential to the duplication of shocks since the covid-19 pandemic, including tighter financial conditions that have kicked many African countries out of the international markets. In face with this situation, International financial institutions are called to step up their game and increase the scale of their intervention. However, under the current configuration, these institutions appear to be far from being equipped to face the looming challenges of the 21st century. The Multilateral development banks (MDB) system is lacking the required size to provide more funding to development projects and deliver on global public goods and African countries are lacking a safety net mechanism that can act as a stabilizer in face of recurrent shocks.

- How can the global financial architecture be reformed to be fit for purpose?

- What challenges impede efficient debt restructuring and what mechanisms can be adopted to enhance its efficiency?

- What role can the African Development Bank play in the new financial architecture?