Dig deep, think local, go digital: UNCTAD head to African leaders

02 August 2018

African nations need to mobilize their continent's resources to finance development, and ease the way for small business to trade, UNCTAD Secretary-General Mukhisa Kituyi has said.

Speaking at the African Leadership Forum 2018 alongside host nation Rwanda’s President Paul Kagame and the former head of state of Somalia, Hassan Sheikh Mohamud, Dr. Kituyi, took stock of the steep challenges posed by the current climate in international trade.

“Today, we’re living in a very hostile environment, with rising levels of protectionism,” he said at the two-day forum in the Rwandan capital Kigali, the focus of which is how to finance Africa’s transformation to sustainable development.

“Projected sources of development finance are drying up,” he warned.

The annual forum is organized by former Tanzanian president Benjamin Mkapa’s office and the Institute of African Leadership for Sustainable Development, also known as the UONGOZI Institute.

African Leadership Forum 2018

Finance is a key issue for the delivery of the 2030 Agenda for Sustainable Development, the core of which are 17 global goals that seek to alleviate poverty and rein in inequalities while protecting the planet and its people. Achieving the targets means going beyond international assistance, trade and investment to leverage resources within national boundaries.

"The global dynamics are such that every region of the world will have to dig inside itself to find the resourcefulness to adjust, to grow. Nobody’s going to grow Africa other than Africans," Dr. Kituyi said.

Illicit financial flows

He highlighted the continent's "collective responsibility" to mobilize its own resources, including by tackling illicit financial flows – a catch-all term for tax evasion, capital flight, trade mispricing, drug trafficking, money laundering and other manoeuvres that rob the continent of billions each year.

The money drained out of Africa through illicit financial flows has become a matter of major concern because of the scale and negative effects on social and economic development on the continent, where the majority of the world's least developed countries are located.

UN estimates put the annual loss at around $50 billion. To put this amount in perspective, it's roughly double the official development assistance that Africa receives, and also outweighs the $42 billion that the continent received in foreign direct investment in 2017, according to the latest edition of UNCTAD’s World Investment Report.

The estimate may well fall short of reality because accurate data doesn't exist for all transactions and for all African countries, leading UNCTAD and its partner organizations to launch the “Better Data, Better Lives” statistics project earlier this year.

Rules made for big business

Dr. Kituyi also said it was vital for African nations to do more for the small businesses that are the foundation of the continent’s economy, particularly the small-scale operations in border zones.

He cited his own experience working on the nexus between politics and economics in Kenya, where he was first elected to parliament in 1992 and served as minister of trade and industry from 2002 to 2007.

“A man from Nairobi with a container drives through and takes merchandise to Uganda or Rwanda and it’s called regional trade. A woman at the border between Uganda and Kenya with 20 kilograms of maize, trying to sell on the other side of the border, is called a smuggler,” he recalled.

“And it is still the case today,” he said.

“The rules are made for the convenience of big business. The small-scale border communities […] are not seen as part of the equation of regional trade. They’re smugglers. They are an inconvenience. I am not asking for anybody to organize the informal sector. I am saying they are the main drivers of our enterprise. Give them an address to so that they receive electricity. Give them the physical convenience and security so that they can absorb technology and innovate their production processes.”

UNCTAD spotlighted the role of women cross-border traders in Africa earlier this year in its “Borderline” project.

The power of e-commerce

Dr. Kituyi also highlighted the burgeoning importance of e-commerce for Africa, saying, “If we are talking about financing sustainable development we cannot wish away the critical role of the digital economy.”

Last month, Dr. Kituyi took part in African Union talks on crafting an e-commerce strategy for the continent, which came after the landmark adoption in March of the African Continental Free Trade Agreement.

E-commerce will be in focus at a high-level event next week in South Africa, where Dr. Kituyi will join President Cyril Ramaphosa and Jack Ma, the founder and head of China-based e-commerce giant Alibaba, who serves as a special adviser to UNCTAD on young entrepreneurs and small business.

In December, UNCTAD will organize its first-ever Africa E-Commerce Week in December in the Kenyan capital, Nairobi, building on the success of its global editions in Geneva.