African countries are now implementing the Agenda 2063 and Agenda 2030 (also known as Sustainable Development Goals – SDGs), both requiring huge financial resources. Globally, large amounts of investable resources, mostly private, are available in advanced and emerging economies while domestic public resources, even in low-income countries, can be increased when the relevant capacities are in place. To efficiently mobilize the available resources, therefore, countries need to tackle the binding capacity constraints. These include human and institutional capacity to effectively manage tax exemptions, tax evasion, capital flight, illicit financial flows; constraints to accessing private resources particularly blended finance offered by public private partnership (PPP) avenues; and constraints relating to underdeveloped capital markets in most Africa countries. this Issues paper reviews the relevant existing policy documents and academic literature from different sources in order to understand the state of financial resource mobilization, allocation and absorption in Africa. The review helps to identify key capacity constraints facing African countries. Evidence-based recommendations identified from the review provide information for identifying capacity needs. Secondly, the Issues paper highlights good practices in these areas from a number of Africa countries.
It then specifically singles out two case studies of well-performing countries in Africa: Botswana and Rwanda to provide additional evidence on best practices and capacity imperatives for financial resource mobilization, utilization and absorption. Lessons from these countries are used to draw inferences for policy and practice. The paper is hence structured to consider the issues by: First, looking at the resources available for Africa’s development (both domestic and external), then reflecting on the absorption challenge facing African countries, after which it highlighting the capacities required to access and absorb the mobilized resources largely learning from countries that have succeeded in this area, before concluding with lessons learnt and recommendations for African Governments.
