Africa will stop depending on donors to finance its own development if it tames illicit financial flows, improves taxation and adds value to its raw materials, according to Rwandan President Paul Kagame.
He was speaking at the opening of the African Leadership Forum last week.
The leader, who is also the current chairperson of the African Union and is leading the continental body’s reform process, said the continent is losing billions in illicit financial flows while it continues to depend on the goodwill of others.
“The value of illicit financial flows, evaded taxes, and commodity extraction greatly exceeds that of foreign aid. But, we have to take responsibility for the misallocation of Africa’s resources and take steps to correct that,” he said.
President Kagame said that Africa needs the right mindset rather than more funding.
“In Africa, we have everything we need, in real terms. Whatever is lacking, we have the means to acquire. And yet, we remain mentally married to the idea that nothing can get moving without external finance,” he said.
President Kagame said that the African continent can hit a turning point, firstly through accountability. He gave the example of domestic tax collection, where it has more to do with building trust that public funds will be spent on the right things rather than technical incapabilities.
Regional integration and the will for countries to work together is another key driver.
“The entry into force of the African Continental Free Trade Area is set to significantly increase trade within Africa, and consequently improve tax collection,” said President Kagame, adding that “we gain immeasurably by trading with each other, and lose so much, when we don’t.”
On the challenges the continent faces, he pointed out bad politics, which affect how countries trade with each other.
Former Tanzanian president, Benjamin Mkapa, who is behind the Uongozi Institute that organises the leadership forum, said that African countries need to seal leaks that cost revenues while at the same time enabling domestic investments. He added that if African countries don’t facilitate domestic investments, foreign investors will come and take over.
The fifth edition of the African Leadership Forum held in Kigali under the theme, Financing Africa’s Transformation for Sustainable Development was aimed at charting the way forward for the continent to be self-financing to accelerate development.