Remarks by Angel Gurría
Berlin, Germany, 12 June 2017
(As prepared for delivery)
Dear President Paul Kagame, President Akinwumi Adesina, Mr. Thomas Silberhorn, Excellencies, Ladies and Gentlemen:
I am delighted to join you in Berlin for the launch of the 2017 African Economic Outlook: Entrepreneurship and Industrialisation. This is the 16th edition in our annual series, one of the many fruits of our partnership with the African Development Bank (AfDB). Its release today is a good opportunity to reflect on strengthening our work with African countries ahead of the G20 Africa Summit.
The OECD’s engagement with Africa continues to deepen and flourish. We see this at the OECD Development Centre that counts nine African countries among its 52 Members, four of which (Morocco, Tunisia, Cote d’Ivoire and Senegal) have joined the G20 Compacts. We see this at the OECD’s Sahel and West Africa Club that promotes policy dialogue and analysis to enhance regional co-operation in the 17 countries of ECOWAS, UEMOA and CILSS. And we see this in the 23 African countries that have joined the 140-strong Global Forum on Transparency and Exchange of Information for Tax Purposes, and the 17 that have joined our Inclusive Framework on BEPS in the global fight against tax evasion and tax avoidance, some of which ─ like Senegal ─ signed the ground breaking Multilateral Convention to Prevent BEPS in Paris last week.
As we’ve just heard, Africa’s growth is expected to rebound to 3.4% this year, after a slowdown in 2016 to 2.2%, fuelled by a jump in domestic demand and a modest increase in commodity prices. This rebound will make Africa the world’s second fastest growing region after Asia!
But the 5% growth rates of the early 2000s remain a distant memory for many African countries. Jobs have not kept up with population growth. More than 544 million people in 46 African countries are considered poor across multiple dimensions. And even in countries where growth has been high, it has not been inclusive.
Moving up global value chains is the key to overcoming these challenges. And this is precisely why industrialisation is an aspiration of the African Union’s Agenda 2063, one of AfDB’s “High 5” priorities, and the theme of the 2017 African Economic Outlook.
Africa’s industrialisation will not replicate the OECD’s old experiences or even those of the Asian tigers. Rather, it aims to avoid the pitfalls of “dirty” industrialisation, create jobs for Africa’s youth and encourage the growth of private African companies. With fewer legacy systems and with its vibrant entrepreneurial spirit, Africa can leapfrog over old generations of technology and catapult its industrialisation.
But realising this potential rests on three priorities: good POLICIES, greater INFRASTRUCTURE, and predictable PUBLIC REVENUES. Let’s take a look at how the OECD is helping in each area.
First, policies. Boosting productivity, fostering innovation and accelerating industrialisation can be unleashed by reforms tailored to local contexts. And this is where the OECD’s Multidimensional Country Reviews (MDCRs) are stepping up. Last year in Washington, Prime Minister Daniel Kablan Duncan and I launched the OECD’s MDCR for Côte d’Ivoire, which identified five reform areas, made 83 recommendations and outlined 370 actions to support emergence by 2020. At Côte d’Ivoire’s request, we are now working together on implementation. The success of our joint effort prompted Morocco and Senegal to ask for MDCRs. And when I told President Alpha Condé about them at the G7 Summit in Taormina, he told me he wanted an MDCR for Guinea too!
Second, infrastructure. Mobilising domestic and foreign investment to finance the infrastructure gap in African countries ─ conservatively estimated at USD 40 billion annually ─ is critical. Again, such infrastructure must be as green as possible. At the G20’s request, the OECD has developed indicators to help governments monitor reforms aimed at mobilising private investment. These build on the OECD Policy Framework for Investment, which has been tested in several developing countries, including Morocco, Nigeria, Tunisia and the SADC region. And the OECD-G20 Task Force on Institutional investors has been addressing regulatory aspects that may prevent pension funds from investing in infrastructure.
Third, revenues. African governments must be able to tax and tax better. Our Tax Revenue Statistics – produced with the African Union and ATAF – show that Africa’s tax to-GDP ratio is rising, but still averages below 16%, compared to the OECD’s average of 34.4%.
Eleven African countries have joined the OECD-UNDP Tax Inspectors without Borders (TIWB) Initiative and two more are about to join. Our own conservative estimates indicate that for every dollar spent on the TIWB Initiative, developing countries receive a return in excess of USD 1,000 from taxes recovered. Senegal, for example, has benefited to the tune of USD 12.3 million US dollars in additional tax income. And resources are not the only benefit of the TIWB Initiative ─ it has also catalysed greater co-operation between African countries!
Ladies and Gentlemen:
Policies, infrastructure and revenues are the backbone of Africa’s successful development. The continent’s reform-minded governments show that change is possible. The OECD remains Africa’s partner for change ─ especially through our Development Centre and our Sahel and West Africa Club ─ alongside African institutions like AfDB.
The OECD looks forward to continuing our work with you to design, develop and deliver better policies for better lives in Africa. Count on us!