A.Pedro: Africa has huge comparative advantage; cut incentives, look inward

Sunday October 15 2023

The Acting Executive Secretary of the United Nations Economic Commission for Africa, Antonio Pedro. PHOTO | DIDIER HABIMANA | NMG


The Acting Executive Secretary of the United Nations Economic Commission for Africa (Uneca) Antonio Pedro spoke to Berna Namata on the recent meeting in Kigali, Rwanda on African Union’s Agenda 2063 and the key issues facing the continent.


How can countries benefit from critical mineral resources as Africa positions itself in the global value chain for e-mobility – battery and electric vehicle manufacturing, in particular?

In November 2011, when we organised the Africa- DRC business forum, we positioned it not only as value -addition within the extractive industry but also as a huge opportunity to accelerate the deployment of renewable energy on the continent as well as electrification of transport systems.

This is because batteries are now key to developing solar panels for the storage of capacity and now with the improvements on the technology front those batteries can store huge amounts of energy. Now, thousands of megawatts can stored in these solar panels.

Initially, we focused on the production of battery precursors, which are chemicals that go into the batteries but then we undertook a study on AfCFTA and implications on transport and services infrastructure that indicate that for us to make the most of the AfCFTA we need about $500 million in transport and services infrastructure.


Read: Here is the biggest hurdle to AfCFTA take-off

On that basis, we changed completely the scope of our project – the ambition then became the entire value chain including the production of electric vehicles.

The immediate opportunity in Africa for example is in Rwanda the mototaxis are an important part of public transport infrastructure; any country on the continent can develop that industry, and the production of motorbikes is a quick win. Equally so is the production of mini buses as they constitute the main public transport in major cities in Africa.

If you unbundle the whole value chain, the production of all the parts — this means this is not just business only for DRC and Zambia, it is a business for the entire continent because minerals come from different parts of the continent.

On the development of the battery value chain in DRC, we have proposed the need to establish special-purpose vehicles for ordinary citizens to buy shares in what constitutes the opportunity. These shares can be bought by anybody from whatever platform they are.

The African carbon trading market has taken off but investment remains low. What are the barriers? How can they be addressed?

One is our ability to tap into this market by developing the necessary soft infrastructure. For example, we are working with the Congo Basin Climate Commission to develop a carbon credit registry, which is one of the first steps towards creating markets that are credible.

Read: African leaders bank on carbon taxes to raise climate finance

Second is pricing. Some countries on the continent that have already established those carbon credit markets but are unfortunately victims of third parties and intermediaries that are buying those carbon credits at around $5 a tonne whereas the target should be $120 per tonne and above.

It requires creating the necessary infrastructure of carbon market facilities so that transactions can happen.

Recently, African ministers and the African Union Executive Council convened in Kigali to discuss the financing of AU’s Agenda 2063 and its flagship projects. What was the outcome?

We concluded that we are off-track. In the first 10-year implementation plan, most of the aspirations have not been met and we need, therefore, for the second 10-year implementation plan, to deliver with a greater sense of purpose, urgency and unity. This applies too for the SDGs.

The meeting also looked at the interface between SDGs and Agenda 2063, and everyone recognised that the implementation of SDGs is in-sync with implementation of Agenda 2063.

There is 80 percent alignment of the goals in terms of SDGs and aspirations, and that alone is sufficient enough coincidence for us to utilise the full force of the UN to support the implementation of the Agenda 2063 as well. We did offer the AU a system — the Integrated Planning and Reporting Toolkit, a dynamic software for aligning the 2030 Agenda and Agenda 2030 and national development plans.

We will try and domesticate Agenda 2063 in the work of UN country teams. For example, Uneca has contributed to the formulation of 28 National AfCFTA strategies, which we will incorporate in the cooperation frameworks of UN country teams.

Read: Powering trade through AfCFTA: A People-driven wholesome development agenda

How will these plans be funded?

It is to improve domestic resource mobilisation; there are huge opportunities that we are currently not capturing in their entirety — for example, pension funds — we have about $1.3 trillion of savings that are in most cases in most jurisdictions used for investment in real estate, etc.

One argument that has been made which we fully agree with is that if you create special-purpose vehicles those resources could be enablers to enhance our productive capabilities, infrastructure, etc.

In countries where remittances from the diaspora constitute a huge input in terms of revenue again the same problem; in many countries, this goes to fund consumption; this is a lot of money which could otherwise be utilised.

There are loopholes in tax administration that need to be closed to ensure that the tax base expands, and collection improves.

For instance, illicit financial flows we detailed in the famous Mbeki Report, the figure quoted then was $50 billion, but now $89 billion. If there’s inaction, it could rise to $150 billion.

Our fiscal regimes contain some incentives we give that are not necessary, especially in areas where we have a huge comparative advantage. For instance, we don’t need to give 30-year tax holidays. What investors appreciate most is predictability.

We also need to valorise the ecological services associated with our national capital, which contribute to the regulation of climate globally through the development of carbon credit markets which are, according to our own numbers if we succeed in selling a tonne of CO2 at $120, we can generate about $82 billion a year much than we get now from overseas development, which is only about $60 billion or less than that. This is a huge opportunity for us to fund our own development in a sustainable manner.