In 2015, African and other world leaders will meet in Addis Ababa for the Third International Conference on Financing for Development. This meeting will be crucial for Africa given the vast resources needed to support inclusive, sustainable growth across the continent. It will also provide a unique opportunity for African leaders to gauge their countries’ progress on implementing the current development financing agenda, as well as reformulate their strategies given new and emerging trends in finance.
In his latest article, Brookings Africa Growth Initiative Director and Senior Fellow Amadou Sy reviews the changing dynamics of development finance on the African continent, specifically examining the diverse roles of domestic and international, public, private and “blended” financing for development. Over the past decade, Sy finds that development finance has transformed dramatically in Africa, with official development assistance steadily declining, and domestic and external financial flows such as sovereign bonds, remittances, private capital flows and foreign direct investment (FDI) rising. Thus, he contends that longer-term, more stable forms of financial flows, including FDI, are increasing to Africa. However, he warns that these flows may not directly catalyze growth unless they are coupled with policies that enable the transfer of technology and skills to African workers and businesses, as well as the integration of local businesses into the value chains of multinational corporations.
Sy calls on African policymakers to engage the private sector in discussions on how to attract more and better finance and most efficiently support sustainable growth. He recommends that governments provide incentives for the private sector to invest in education and training for local workers and include African businesses in their supply chains.
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Foresight Africa 2015
, which details the top priorities for Africa in the coming year, to learn more about the Africa’s development financing agenda as well as other critical issues for the region.