G20 Finance Ministers and Central Bank Governors Meeting: Session 3: Compact with Africa
Remarks by Angel Gurría
Washington, USA - 20 April 2018
(As prepared for delivery)
Ministers, Central Bank Governors,
The OECD is proud to support the implementation of the G20 Compact with Africa as a partner institution. We are working with governments and other international organisations to support reform efforts in Côte d’Ivoire, Egypt, Morocco, Senegal and Tunisia. OECD support to these countries is focusing on some of the basic building blocks of a solid climate for investment, including (1) the implementation of BEPS and other global tax standards; and (2) the broader policy and legal frameworks for investment, building on the OECD Policy Framework for Investment.
The OECD fully supports the increased focus on peer learning in this important initiative. As you all know, the sharing of country experiences is very much part of our organisation’s DNA, and we are pleased to see that the Compact with Africa encourages exchanges between the G20 and participating African countries.
A couple of days ago, the OECD supported a first exchange in the context of the Africa Advisory Group focused on domestic resource mobilisation and tax. The importance of this agenda for Africa cannot be emphasised enough both as a driver of domestic resource mobilisation as well as a basic pillar of an investment-friendly tax system. Despite substantial progress since 2000, taxes represent on average around 19% of GDP in the 16 African countries covered in the latest edition of our Revenue Statistics in Africa report, compared to close to 23% of GDP in Latin America and the Caribbean.
We stand ready to continue contributing our evidence and analysis on key regional or global constraints for investment to foster discussions and support Compact countries. I just want to raise one key area where the G20 Compact with Africa can make a difference: the role of institutional investors as potential financiers of the sustainable and quality infrastructure Africa needs to meet the SDG targets.
While institutional investors are increasingly interested in emerging markets, looking for portfolio diversification and new sources of long-term revenue, only around 0.5% (roughly USD 10bn) of the total foreign investment from OECD country pension funds is currently directed to Africa. This is explained by supply- and demand-side constraints, including regulatory obstacles in home jurisdictions, limited investment opportunities through local capital markets and weak sovereign credit ratings.
The OECD stands ready to support a discussion on this issue in the context of the Compact with Africa, building on the G20 High Level Principles for Long Term Financing by Institutional Investors and the G20/OECD Guidance Note on Diversifying Sources of Finance for Infrastructure and SMEs. To develop this work, the OECD stands ready to mobilise the G20/OECD Taskforce on Institutional Investors and Long-term Investment Financing as well as the International Organisation of Pension Supervisors (IOPS). Thank you.
OECD work with Africa