Economy

Economic centralisation holding back Africa’s devt. – Nobel laureate

Economic centralisation holding back Africa’s devt. – Nobel laureate
Written by Maritime First

Nobel Memorial Prize laureate Roger Myerson, an economist, has urged African governments to decentralise power and make resources available to local councils in order to spur development.

Myerson who spoke at the ongoing African Economic Conference said the devolution of power to the local councils could also help curb corruption and create competition.

Myerson, a winner of the 2007 Nobel Memorial Prize in Economic Sciences, spoke on the role of institutional and political frameworks in Africa’s capacity to finance its development.

He was joined by Ahunna Eziakonwa, the UN Development Programme’s Assistant Administrator and Regional Director for Africa.

Citing details of the findings of his research published in April 2021 which held that decentralisation was a driving force for development, the laureate said that successful countries devolved between 20 per cent and 30 per cent of their national budgets to local councils.

“A lack of decentralisation is worse than a lack of democracy, a lack of decentralised systems can be most detrimental to development.

“If you are not giving 20 per cent of the national budget to sub-nationals, you are not serious about decentralisation,” he said.

Furthermore, the University of Chicago professor said the trade disruptions caused by the Coronavirus pandemic (COVID-19) provided an opportunity for African countries to grow local industries

The pandemic has been central to discussions at the AEC, which began on Thursday, Dec. 2 with a call from the development community for vaccine equity.

The event is organised by the African Development Bank, the United Nations Development Programme, and the Economic Commission for Africa.

Key changes that have been advocated are the expansion of the tax base in African countries as well as vaccine equity, with many calling for vaccine production within Africa.

“We are defining new financial mechanisms.

We need to use non-conventional models and to think outside of the box, or even without the box,” said Nicolas Kazadi, Finance Minister of the Democratic Republic of the Congo.

Kevin Urama, Acting Chief Economist and Vice-President at the African Development Bank said that in 2020 the bank disbursed 7.3 billion dollars, a 40 per cent increase from the 5.2 billion dollars disbursed in 2019.

He said that the increase in the volume of disbursement was due to releases from the COVID-19 Response Facility.

He noted that the new pandemic wave is expected to put further pressure on the debt situation of many countries, hence the need for reforms in African nations as well as a collective approach to economic growth.

 

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