Tag: Ameenah Gurib-Fakim

‘I am because you are’

A view of an artificial installed at Mon Choisy Beach to combat soil erosion and create resilience. The installation will break up the waves before they reach the shore and will also act as a habitat for fish. Credit: Reuben Pillay/Climate Visuals Countdown
  • Opinion by Ameenah Gurib-Fakim (port louis)
  • Inter Press Service
  • Ameenah Gurib-Fakim argues that Innovative global development finance ecosystems are needed to unlock equitable international financing flows while preserving the fiscal sovereignty of developing countries to pursue development pathways unique to their circumstances and realities.

PORT LOUIS, Sep 04 (IPS) – The Africa Climate Summit 2023 is expected to start with renewed hope. In its 60+ years of post-independence history, Africa has contributed around 3% of Green House Emissions, accounts for approximately 2.6% of global trade, and less than 3% of the world’s GDP in 2021.

Home to 1.4 billion people with a median age of 16, the continent continues to suffer from stalling multilateral trade negotiations, and the ‘death of the Doha round’ has given rise to unprecedented forms of protectionism, unilateralism, a lack of political leadership to embrace and nurture multilateralism. Unfair competition, unilateral partitioning of Africa into Economic Partnership Agreements (EPAs), and skewed intellectual property rights have resulted in an international trade system that disproportionately favours wealthy economies.

Ameenah Gurib-Fakim President of the Republic of Mauritius (2015-2018)
Ameenah Gurib-Fakim, President of the Republic of Mauritius (2015-2018)

The emerging trade-climate change measures will only further restrict Africa’s participation in global trade markets. So, to tackle the looming climate crisis, the question is as follows: Should Africa still depend on the ‘generosity’ of the global north? Their inability to meet the $100 billion pledge reveals their moral reluctance to acknowledge developed countries’ contribution to climate change.

Yet to transition to a greener future, Africa must access affordable public and private funding, coupled with debt relief. These shifts are central to building capacity for sustained transformative growth and resilience in the face of climate challenges.

Developed countries have resisted fundamental reforms to support the developing world with the climate emergency. Innovative global development finance ecosystems are needed to unlock equitable international financing flows while preserving the fiscal sovereignty of developing countries to pursue development pathways unique to their circumstances and realities.

Africa’s position is constrained by a lack of affordable, reliable, and sufficient finance, juxtaposed with a debt crisis compounded by climate challenges. Rather than allocating increased funds to adaptation efforts, the majority of it gets directed towards mitigation which benefits financiers and lenders and thus depriving countries of a voice.

Africa’s economy is vulnerable, especially post-pandemic. The external debt has exceeded $1 trillion in 2021. It detracts from African governments’ ability to sustain meaningful socio-economic gains. Those with a pessimistic view of Africa tend to label the debt issue as an African problem disconnected from the exploitative policies of developed nations, but the true concern lies with the developed nations. They possess significant privileges to issue global reserve currencies leading to highly imbal­anced distribution of international liquidity, as well as exorbitant interest rates and capital outflows driven by the monetary policies of affluent economies.

So, whenever faced with liquidity constraints, Africa has no choice but to turn to the World Bank and International Monetary Fund (IMF) to boost foreign exchange reserves. In the international arena, climate financing is becoming more commercial than concessional.

The USA is hindering the recapitalisation of the World Bank for geopolitical considerations with the unfortunate outcome of deepening structural gaps and costly financing for Africa. Thus, Africa is compelled to seek loans from commercial entities with the high cost of borrowing impeding investments.

The issuance and recycling of SDRs issued by the IMF as a means for enhancing available climate finance is drawing global attention. IMF’s re-channelling of idle SDR should be used to help developing countries with much-needed finance.

The Bridgetown Initiative encapsulates many such proposals, including the restoration of debt sus­tainability; long-term debt restructuring with low interest rates; increase in official sector-development lending; mobilise more in green private sector investment; reform the trade system to support global green and just transformations.

African countries are paying an unnecessary premium on their cost of capital and not attracting sufficient foreign direct investment (FDI), especially in innovative areas and for global public goods. Africa’s fiscal and tax architecture suffers from vulnerabilities, while the global tax system is still built on historic power asymmetries.

Developed countries largely devised international rules that resonate with their own economic interests. Furthermore, the application of Base Erosion and Profit Shifting (BEPS) strategies, the digital economy, and climate-related measures, such as the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM), undermine multilateral approaches and affect the fiscal sovereignty of African economies.

Voluntary carbon markets, including the Africa Carbon Markets Initiative, Sovereign wealth funds could unlock much-needed finance for undervalued assets and services. Africa’s own development banks, the partnership and investment proposed by the BRICS/New Development Bank, and the private sector are also essential sources of long-term financing, and tapping into them could enable Africa’s self-directed growth.

There is a globally recognised need to shift, unlock, scale, and mobilise new forms of ‘fit for purpose’ finance to deliver on climate agreements and sus­tainable development goals. The priority of priorities for African countries is affordable, predictable, accessible finance at scale.

Finally, in building a financial infrastructure that is relevant for all, African countries should not be passive receptors of international reforms and debates.

They must have the authority to lead in the direction they choose; they must have that voice and, more importantly, the collective interests at local, regional as well as at the international level.

It is only then that Africa will be compensated for the harm that it did not commit!

Note: Ameenah Gurib-Fakim is the former President of the Republic of Mauritius (2015-2018)

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Quo Vadis Republic of Mauritius? — Global Issues

  • Opinion by Ameenah Gurib-Fakim (port louis, mauritius)
  • Inter Press Service

PORT LOUIS, Mauritius, Mar 30 (IPS) – Dr. Ameenah Gurib-Fakim is Former President of the Republic of MauritiusOn 12th March 2023, The Republic of Mauritius celebrates 55 years of post-independence history. It would be an understatement to just say that there has been a lot of water under the bridge on our journey to self-determination!.. Indeed, we have made massive progress since we lowered the Union Jack and unfurled our own flag. It was and remains a moment of great pride whenever I see our flag in any international event, I participate in.

We are a small vulnerable island, deprived of natural resources and at the time of independence, we were flanked with a monoculture economy, high unemployment, low education and low income were amongst the major challenges. We had been relegated to being a basket case. Even by Nobel prize winners concluded that because of our isolation from the then major capitals; climate challenges etc. we were doomed at a time when our per capita income hovered around 200USD.

We were more a recipe for disaster than that of a success story. Still over time, with leadership and vision, we proved to the world that another outcome was feasible, but more importantly, that profound transformation was possible, and we succeeded within one single generation.

We became the shining star especially South of the Sahara and our experience brings useful insights into the dynamics and pitfalls of an economic transformation journey. Nonetheless, this transformation has been conducted in such a manner that the economic landscape, society and institutions were modernised simultaneously, albeit at various speeds, taking into consideration the political, human, institutional and economic realities and constraints of the time. The approach was largely inclusive because the major asset then and now remains our diverse, talented population.

Our story had been based on the following foundational stones: political leadership, strong institutions, ethnic diversity, a class of versatile indigenous entrepreneur and a well-structured private sector engaged in dialogues on policy matters. Coupled with this, the balance has been between economic and social objectives, with a strong focus on the human capital, through free education since 1976, free health care, and a minimum basic social safety net for the most vulnerable.

Still the strength of our institutions were a key guarantee for investment, entrepreneurship and innovation. While acknowledging that significant progress has been achieved in the last 50+ years, the global dynamics call for more and more reforms if our country wants to avoid the middle-income trap and join the club of high-income countries within the realm of a changing climate. There are already indications of worrying signals: the average growth rate has been stabilizing at less than 5%, necessary to enable incremental changes, but insufficient to steam up the engine to the next level. Beyond the redesigning and re-engineering of the economic landscape, some implementable reforms will have to be addressed.

The main weaknesses are found in our education system. While we have a 99% enrolment rate at the primary level, but what comes next is disappointing. Let’s take the hypothetical 100 children entering our primary school, 80 will manage to pass their primary school exam to enter secondary school; only 60 will manage to succeed after the first 3 years, 40 will pass the Grade 5 (O-level) exams and with only 20-30 will reach the end of the secondary school cycle. This is in total contradiction to the requirements of a high-income country; one that ambitions to attract High Tech investment. The curriculum needs to move away from being too academic and with little openings for technical and vocational training.

Also, labour market reforms need to ensure flexibility. A diversified economic base only makes sense if it is possible for people to move across sectors. Currently, the stiffness of labour market and employment schemes that go with it, makes it difficult for people to move around. The basic principle must remain the protection of the people as opposed to jobs.

Finally, Mauritius must step up efforts to plug into regional and global value chains. We must continue to build on the regional market and must upgrade our participation in the global value chains, by capturing activities with higher value addition. Our regional market penetration remains weak. In the last decade it has been estimated that Mauritius export to the SADC region amounted to only 1.3% while its imports from the SADC region amounted to 2.5%. Similarly, we still have too big a bias towards our traditional markets to export low value added products.

Competition over concepts rather than over processes will be increasingly necessary to have a meaningful role. To achieve this, increased investment in quality education, innovation, research and development and technology, the appropriate ecosystem for start-ups, is crucial. We are at a crossroad in our economic transformation. The latter can remain a continuous process as we have had a good track record so far. The challenge for our country now lies in combining sustained domestic reforms with efforts required to keep up with international trends to become a global player. This demands that we align all our talents, competence and resources.

Next door to us, a giant is waking up – The African continent and the AfCFTA presents a huge opportunity, for, inter alia, our manufacturing sector, provided we engage with her, like in any relationship, seriously, and not just pay lip service. We have to keep reminding ourselves that the world we embraced in 1968, is now fast mutating. We were born in a bipolar world and now living in an increasingly multipolar world. Our foreign policy must remain agile as it is going to be a rocky road especially as we will have to count the presence of new emerging African middle-income countries that are increasingly catching up with their economic trajectory.

We will only succeed if we manage to navigate through competition, build trust and strengthen our institutions, acknowledge our diversity as strength, ensure meritocracy and by turning challenges into potential opportunities as ONE people and ONE Nation, in Peace, Justice and Liberty.

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