UNECA Executive Secretary Vera Songwe took up her role as the Executive Secretary of the Economic Commission for Africa (ECA) on August 3, 2017. She is the first woman to ever serve in the position. Before joining the ECA, she was Regional Director of the International Finance Corporation, covering West and Central Africa.
The Ethiopian Herald has sat down with her to talk on wide-ranging issues.
EH: What are the reform agenda and priority areas the Commission has been working on?
Vera Songwe: One of our major engagements has been working through think tanks to essentially create ideas that would help Africa grow faster and create jobs the continent needs.
The continent has to create 30 million jobs every year to prosper.
We are also trying to build ECA capacity to be able to generate better ideas and create capacity in member countries with whom the Commission work with an international think thank so that collectively work to meet the agenda. The second one is that ECA is working to help the macroeconomic stability of the continent.
Africa is one of the fast-growing ones. It was growing at 7.6 percent on average. Growth is now down by 3.4 percent. We know that the continent should grow by 10 percent on average to be able to create jobs for the growing population. We are working
to see if the continent could restart growing fast.
Also, we are looking at helping the continent in managing the debt burden it has faced. We need to finance our growth and yet we are not collecting enough revenue. We need to find other ways of financing the continent’s growth.
We are looking at ways and means of getting new financing. It is building in Addis Ababa’s agenda how we can finance our growth. Regional integration is another priority in which ECA is working hard. Continental Free Trade Area Agreement and dealing with migration are other means we are working on integrate the continent from Cape to Cairo and Djibouti to Dakar and see how those markets flourish.
Similarly, advocacy is another area in which the Commission pays utmost attention, be them on gender, migration and other issues. Migration, corruption and illicit financial flow are some of the advocacies we are making to mobilize governments to be vibrant at combating the problems.
EH: As someone who has been engaged in the financial sector, what is your view on the macroeconomic stability of the continent?
Vera Songwe: The Continent is a big one but part of the global economy which is slowing down. Growths are slow in the US, China, and Europe. African countries have made an effort. Countries have grown at a rate of revenue to GDP from 15 to 17 percent.
We are not collecting enough revenue to expand infrastructure, which is a huge source of growth because it creates jobs, puts money in people’s pocket and gets spent. The horn of Africa is growing fast. The average is about 6.6 percent and even 8 percent. Though this part of the continent is a fast-growing economy, growth is still going down because of the economic slowdown in the world.
When growth slows, the amount of resources and wealth gets smaller, the money the countries borrowed stays the same. So the money they borrowed as a proportion of what they have gets bigger. As a result, the debt burden to GDP ratio gets bigger – which means you cannot borrow more, and you cannot invest more and create more jobs.
We
are definitely in a difficult situation that is why we are doing in a
continental free trade agreement. If African countries start trading among one
another, today a lot of money borrowed is to buy finished goods and commodities
outside of the continent. In some countries, even 32 percent of their GDP goes
to buy finished commodities and services. If internal trade grows, the price
will drop, more jobs will be created and more income will be generated for the continent. We hope that even though the situation is difficult now, with the right policy that creats more revenue and by trading with ourselves, we will be able to regenerate the economy and see growth going up.
EH: How do you view Africa’s debt distress and alternative ways of financing developments in the continent?
Vera Songwe: At the end of the day, every African country is responsible for a decision it makes. I think it will not be fair to say our leaders and finance heads do not know the cost of debt.
Borrowing is not a bad idea, what matters most is what we do with the money borrowed. If you borrow and invest, you will get a high return and easily pay back your debt. If you borrow and do get high returns and invest in things that do not generate return, then you will get into trouble.
Lots of African countries are doing well. Senegal, Togo, and Kenya are some of the countries using debt for generating growth and building megaprojects. IMF and other financial institutions have an obligation to themselves to be a servant. If they give you a resource, they have to make sure the time that you will have to give them back.
Our leaders have a choice, in East Asia, tax revenue to GDP is 34 percent and it is however 17 percent in Africa, and even it is 7 percent in some African countries. So, African countries should fix the economy and increase tax revenue to GDP. Citizens must believe that the resources that they give to the government, in the form of tax, are used to build socioeconomic infrastructure.
The more countries afford to pay for own need, the less resource they need from external institutions. Conditions are imposed by lenders but African countries should also make sure that the money borrowed is used transparently and appropriately.
With technology, Africa can do better and faster and a lot more business can be created. That is why the business environment is important. If you reduce the cost of telecom services, and open the business environment and make access faster, the person who manufactures leather in Ethiopia, for example, can easily sell it in other countries of the continent. We need to get enough energy and ensure connectivity; Africa has the potential to grow more innovative.
EH: What is the progress of the continental free trade agreement and how are you supporting its implementation?
Vera Songwe: We are working with countries today, we have 28 countries that have ratified the agreement, the number of countries that needed for the agreement to come into effect was 22 for the agreement came into effect, and 12 countries are working actively towards the ratification. We are working with countries to do on national competitiveness strategy to identify the potential of countries. For example, Ethiopia has a tourism potential and others have their respective potentials too.
The agreement is about how we can add more value to African products, it is not about the fact that Africa should not trade with other parts of the world. It is about making Africa sending more value-added products other than raw materials. We no longer should send raw material to other parts of the world and import processed and finished products in hard currency.
We do not have to export cotton, we need to export jeans instead. Ghana needs not to send raw gold; it should send jewelry to India. This way countries can create jobs. But, the current way has made Africa growing at 7 percent and failed to create more jobs. Skill development is another area we are working as part of supporting the agreement. We are helping countries in the area of finance and other issues that can help bring success in the implementation of the CFTA.
EH: Migration is becoming Africa’s major challenge; it has taken a toll on the continent. What is your take on this and what is the commission doing to curb illegal migration?
Vera Songwe: We have not lost a fair share of our people. Migration is universal and it has been in the world and will continue. In the last 10 years, African migrants who leave the continent have dropped to 2.7 percent from 3 percent. Africans these days migrate to other countries.
And we love migration as well, for example, 16 percent of ivory coast GDP comes from migrant contribution so it is very much important in the development of countries. And the same is true in Ethiopia, it also earns high remittance from its people living overseas. We need to move to space where we have free movement of people and goods.
Concerning illegal migration, we’ve just finished a safe global compact for safe, orderly and organized migration agreement signed in Morocco. In illegal migration, we have the United Nations Office for Drugs and Crime. It is looking at illegal migration; this problem is severing in the East African region.
Unfortunately, we have not only illegal migration but also organ trade. The United Nations has a strong position in combating illegal migration to stop human suffering. Ethiopia is taking the lead to clamp down and working with regional countries to mitigate illegal migration but at the end of the day promoting development is the lasting solution.
Illegal migration happens in the U.S. and Canada and other parts of the world, there will always be some portion of the population that we have to manage. We should scale up Ethiopia’s efforts and open up the continent for free movements of people.
The Ethiopian Herald December13, 2019
BY DESTA GEBREHIWOT
