Strategic Objective 2: Contribute to the establishment of a fair and transparent international sovereign debt restructuring mechanism
The absence of a satisfactory international framework to restructure the unsustainable debts of low–income countries especially many in Sub-Sahara Africa is worrying at a time many of these countries are registering a rise in new government borrowing. There have been a total of 317 sovereign debt restructurings in Africa since the early 1980s far more than on any other continent or regions yet African perspectives have so far not featured prominently in the ongoing sovereign debt debates globally.With this in mind, AFRODAD believes that an internationally sanctioned arbitration mechanism offers an alternative approach that addresses or eliminates the power imbalance between Governments and Creditors. Currently there is no platform/mechanism in the world that has jurisdiction over cases of debt disputes between sovereign states and private lenders, except Civil Courts and national jurisdictions.
It was a historic occasion when the UN General Assembly voted on 9th of September 2014, in favour of the resolution “Towards the establishment of a multilateral legal framework for sovereign debt restructuring processes” (A/68/L.57/Rev.2). AFRODAD together with key global civil society networks are convinced that the UN General Assembly process to create a multilateral legal framework is a historic chance for developing countries to change “the rules of the game”.
The UN General Assembly adopted a "non-binding" set of principles of a voluntary nature (sovereign’s right to restructure, equitable Treatment, sovereign immunity, majority restructurings). There is still a long way to go in terms of reaching an international legal framework, given the political dynamics in the UN. However this is a major outcome and one in the right direction. AFRODAD will continue to monitor and participate in all UN and other global processes leading to the creation of a binding legal framework for debt restructuring.
Thematic Focus Area 2- Debt Management
Strategic Objective 1: Improved government transparency and accountability on public debt borrowing
The evidence gathered by AFRODAD over the years shows increased sovereign borrowings by the majority of SSA member countries. Borrowed resources should be used to fund poverty reduction and economic growth initiatives. Persistent budget deficits, lack of adequate funds for infrastructure development and the need to develop domestic financial markets among others are some of the factors that are continuing to put pressure on African governments to borrow both externally and internally. Consequently, regardless of such initiatives as the HIPC and MDRI which helped to reduce the debt burdens of some of the highly indebted countries external debt has been on the rise.
Since the development and publication of AFRODAD Borrowing Charter (2011) - principles and guidelines on sovereign financial borrowing, successful lobby and advocacy campaigns have been embarked upon. The Charter provides principles and guidelines that should guide and inform sovereign borrowing with the aim to contribute to the improvement of current weak administrative, institutional and legal processes for loan contraction and public debt management. AFRODAD will continue to lobby borrowing countries especially those in Sub-Saharan Africa to adapt the principles and guidelines, so as to ensure efficient and effective use of debt resources to prevent recurrence of the debt crisis and make governments accountable to their citizens.
AFRODAD will advocate to governments to ensure that fiscal, trade and general macroeconomic policies are designed to promote women’s economic empowerment and that they do not cause adverse gender impacts. It also emphasises that women should be actively involved in the development of macroeconomic policies, programmes and implementation strategies (SDG strategies, trade agreements and national budgets) and calls for gender analysis and gender equality provisions to be integrated into all PRSPs and other poverty reduction strategies. Gender mainstreaming is required with respect to all public expenditure, and gender-responsive budgeting offers a practical application of this that can make best use of limited resources and improve the effectiveness of fiscal policies.
Without gender analysis of the distribution of adjustment costs and benefits – both social and economic – between debtors, creditors and investors, women’s increased unpaid work, the deterioration in their health and the decline in their capabilities remain invisible, which is likely to give a false impression of the effectiveness of policy and development strategies. Both human rights standards and economic efficiency arguments call for gender equality and women’s empowerment. Without gender mainstreaming, there is little chance that efforts to reduce and manage external debt will bring about substantial poverty reduction and improve the lives of both women and men.
Thematic Focus Area 3: International Public Finance
Strategic Objective 2 Emerging lenders: To enhance the capacity of governments to understand and engage on implications of public finance from emerging sources, and monitor its development on poverty reduction
A diverse group of provider’s have gained prominence in the aid landscape that has been dominated by DAC donor agencies, which are non DAC sovereign providers (BRICS and other emerging economies), private households abroad, private philanthropy, private export credit institutions and multilateral agencies. However the proliferation of multiple providers of international public finance brings in its merits and demerits. How governments will react to this reality requires concrete efforts to effectively manage these resources and ensure that there are sustainable frameworks in place. However the cooperation between Africa and the BRICS for instance, has been characterised by weak information systems and limited evaluation practices.
As a new kid on the Bloc, this partnership often expressed as South-South cooperation needs to be monitored and evaluated so as to assess its overall impact on improving the welfare of women, youth and children and ameliorating poverty in the developing countries in Africa. The UN 4th World Conference on Women has cited the feminisation of poverty, unemployment, the increasing fragility of the environment continued violence against women and the widespread exclusion of half of humanity from institutions of power and governance as key threats to sustainable development, peace and security.
AFRODAD’s contribution should result in flagging out challenges as well as the key strengths of this partnership to African governments in particular on the nature, principles, practices, approach and effectiveness of these diverse funders in development cooperation.
Strategic Objective 2: To contribute to the strengthening of extractive industries revenue management in Africa.
Africa is highly endowed with an array of natural resources capable of turning around the economic fortunes of the continent. The mobilisation and utilisation of proceeds from the sector has however not translated into meaningful and tangible benefits for the continent. Therefore while DRM is no doubt an important sustainable source of financing Africa’s development agenda, concerns are still looming that the “natural resource curse” in Africa may continue to limit its effectiveness as evidenced by the experiences of some countries for example, Nigeria, Angola and Congo DR where natural resources are the dominant sources of government revenue, and yet have not been used to improve service delivery and the broader national development objectives. Instead, resource endowments have created incentives for rent seeking, promoted bad governance and political instability.
During this strategic period, AFRODAD will therefore advocate for efficient and effective use of natural resources which is key to expanding the resource base for financing Africa’s development initiatives.
For women in particular, extractive industries can provide opportunities for a better life, including increased employment opportunities, access to revenues, and expanded investment in the local community. Women-led businesses can flourish in the extractives supply chain. Working with and investing in women also makes good business sense - for example, many companies are recruiting women to drive trucks and operate machinery, as they have often found women employees to have an impressive safety record and reduced maintenance of equipment.
Mining, oil drilling and gas extraction all have environmental, social and economic impacts that change women’s lives, often in ways that are dramatically different from their effects on men. Ensuring that men and women have equitable access to the benefits of resource development, and that neither are disproportionately placed at risk, requires commitment
to understanding and acting on the gender dimensions of the sector. This means including women in community-level project consultations, and national-level policy dialogues on extractive industries.
Gender-sensitive consultation is essential to ensure that analysis; training and policies in the extractive industries not only meet the needs of women, but enhance their well-being.
Strategic Objective 3: To advocate for and mobilise support for formulation and implementation of rules and regulations to tackle Illicit Financial Flows from Africa
Africa still struggles to increase domestic resources in the face of high levels of capital flight and limited capacity to collect revenues from multinational corporations (MNCs), particularly those engaged in natural resource extraction. MNC practices are the main causes of illicit financial outflows from the continent and a major obstacle to Africa's domestic resource mobilization efforts, depriving her of crucial investable funds for addressing poverty and structural transformations. Capital flight and stolen assets from sub-Saharan Africa between 1970 and 2010 was estimated at US$ 814 billion, exceeding both Official Development Assistance (US$659billion) and Foreign Direct Investment (US$ 306 billion) over the same period. Hence the need to combat illicit financial flows from the continent and stop the outflow of capital which could otherwise be used to finance the provision of public services such as health and education, as well as key infrastructure such as roads, railways, bridges and power plants which are all key to Africa’s industrialisation and overall socio-economic growth and development.
Robust regulatory frameworks are key to curbing IFFs and increasing the resource base for financing the development initiatives and will therefore contribute to reducing IFFs from the continent by promoting the fight against IFFs at policy level nationally, regionally and internationally.
Tax abuse by corporations and high net -worth individuals forces Governments to raise revenue from other sources, including through regressive taxes and this has a disproportionate burden on the poor and most vulnerable sectors of the society. This has important human rights implications because regressive tax structures limit the redistributive impact of social programmes since they effectively end up being funded by the very people they are supposed to benefit. The need to make up revenue shortfalls through regressive taxes thus further undermines the realization of economic and social rights for the most vulnerable.
This has further implications for gender equality. When low income households face deteriorating public services, many women and girls are forced to take on the additional costs of unpaid care needs.