Interview: Mo Ibrahim
How would you rate the current state of Africa’s financial governance regimes?
MO IBRAHIM: We are seeing many positive trends on the continent, including greater interest in equities. It is a vote of confidence in Africa and its future, and governance across the board has been improving since 2000. However, investors and businesses must not believe that this is just the responsibility of governments. The importance foreign investors place on better governance and, of course, the way they operate is vital. There is still considerable scope for improvement in corporate governance on the continent.
Corruption is a major barrier to progress. For every $1 poor nations receive in foreign aid, it is estimated that $10 flow back to developed countries illicitly. Emerging countries cannot stop these transfers of capital on their own. We need all countries to cooperate in order to regulate activity across the global financial system. We also have to provide incentives for money to be invested in the countries where it is made. These vary from dealing with liquidity issues to ensuring the rule of law is upheld. Underpinning all of this is that governments must be held to account to ensure a well regulated and enabling business environment. But the same levels of scrutiny and governance must also be applied to private sector practices.
In what ways can access to information be improved throughout Africa, and what benefits will this bring?
IBRAHIM: Getting robust data on income inequalities in Africa is crucial, as neither every person nor every community is sharing in the continent’s new wealth. Fostering inclusive, job-creating growth is the key challenge we will face over the next decade in Africa. Accurate information is vital to see where action is needed, to measure the progress of policies and programmes, to build support for courageous decisions and to consolidate political legitimacy. Nations that still depend on institutions to measure national progress and basic statistics cannot be fully autonomous in their policy-making. Closing these gaps requires more funding and support for national statistical offices. We also need a stronger and more coordinated approach to gathering data within regional economic communities. African governments are increasingly aware of the importance of reliable, robust data. Ghana and Nigeria’s recent revisions to their GDP statistics are two examples of progress. But we also need to see the private sector making more of its own information available.
With private investment increasing, what role is there for donor aid in Africa?
IBRAHIM: There is no silver bullet to Africa’s challenges. Neither aid nor trade alone is the solution. Of course, being aid dependent is not desirable and the quicker we can help countries move beyond this position, the better. But aid is necessary when countries cannot access alternative sources of finance. We have to be careful not to throw the baby out with the bath water. Ensuring everyone benefits from rising prosperity is not a challenge in Africa alone. Inequality is growing across the world and, unless this is tackled, it will undermine development and spark broad social unrest.
What can be done to enhance access to credit for start-ups and small and medium-sized enterprises?
IBRAHIM: Poor access to finance is a major barrier although there is some variation from country to country. According to the Gallup World Poll, Algeria has enabled some 30% of its youth to access the money they need to start a business, whereas in Benin, Senegal and Madagascar, the figure is much closer to 5%.
We need local funds and local investors to become involved. As well as governments to create conditions that enable entrepreneurship and job creation by simplifying and modernising licensing, taxation and regulatory regimes, and by eliminating red tape. Right across the continent, young African entrepreneurs are working hard, creating businesses, seizing opportunities, taking risks and developing innovative technologies.
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