African countries lose almost $90 billion in illicit financial flows annually and much more in illicit resource flows and resource theft.
This was revealed by the Chief Economist and Vice President, African Development Bank Group, Prof. Kevin Chika Urama, at the graduation of the African Development Executive Training Program of the African Development Bank’s Public Finance Management Academy (PFMA) held Thursday in Abuja.
While noting that this trend is unacceptable, he said that poorly implemented fiscal policy incentives and excessive dependence on commodity exports for foreign exchange earnings expose countries to highly volatile global market prices and highly vulnerable supply chains.
Urama said the rationale for focusing on the PFM is obvious, as Africa is naturally resource-rich and often cash-poor.
“Several studies have attributed this to poor management of public resources – from ineffective mobilization and use of domestic revenue, unsustainable borrowing and lack of prudence in the use of debt resources, illicit financial and resource flows, resource theft, among others forms of leakages and corruption along the PFM ecosystems in countries.
He added “Currently, African countries loose almost $90 billion in illicit financial flows annually, and much more in illicit resource flows and resource theft, poorly implemented fiscal policy incentives, and excessive dependence on commodity exports for foreign exchange earnings.
“This exposes countries to highly volatile global market prices and highly vulnerable supply chains. This situation is not acceptable.“
Prof. Urama said the Academy provides opportunities for African countries and experts to share practical experiences and learn from each other to improve PFM practices across the continent.
“By bringing together experts and practitioners from Africa and its Development Partners, we encourage peer-to-peer learning among the experts and African Practitioners to ensure that PFM programs are duly embedded in the realities of countries.”
He disclosed that the Academy provides opportunities for African countries and experts to share practical experiences and learn from each other to improve PFM practices across the continent.
“By bringing together experts and practitioners from Africa and its Development Partners, we encourage peer-to-peer learning among the experts and African Practitioners to ensure that PFM programs are duly embedded in the realities of countries.
He commended Dr. Akinwumi Adesina, President of the African Development Bank Group for his leadership and support to the African Development Institute in the initiation, design and processing of the proposal for the establishment of the Academy.
Urama disclosed that the Board of Directors of the Bank Group approved in June 2022 the PFMA, which was designed to deliver high-level structured capacity development (training, peer-to-peer learning, technical assistance, advisory services, institutional support programs, and policy dialogue) to African countries on public financial management.
“The PFMA is an implementation activity of the African Development Bank Group’s programs to strengthen the capacity of African countries in economic governance and knowledge management to enhance wealth creation, prudential management of public finances to improve the quality of lives for Africans.
“In 2021, the Bank approved a capacity development strategy, a strategy for economic governance in Africa, a framework for the management of illicit financial flows, and a multi-dimensional action plan for the mitigation of debt distress in Africa.
“In addition, the Bank launched a program to produce a Public Service Delivery Index (PSDI) to provide an independent and standardized index for assessing the delivery of public services by Public Servants.
The goal is to work with partners to establish a prize to incentivize improvements in the management of public resources and deliver improved quality of public services to countries.
He added that in addition to delivering technical knowledge on PFM, the academy will also work with policymakers on soft skills development to change attitudes and mindsets.
“This will be achieved through high level policy dialogues with Leaders at all levels. We understand that technical knowledge alone will not create the changes we seek.
The 52 participants that made it through the first cohort of 145 public officials nominated by 45 African countries for the 18-month structured capacity development (CD) program were presented with their certificates.
