By Bahle Gama
Minister of Finance Neal Rijkenberg has underscored the need for African governments to prioritize the private sector in their policy formulation and strategic initiatives.
Rijkenberg said this during a panel discussion at Moody’s ratings agency side events during the ongoing African Development Bank (AfDB) annual meeting that began on May 27 and to end on May 31 in Nairobi, Kenya.
Themed ‘Africa’s Transformation, African Development Bank Group, and Reform of the Global Financial Architecture’, the meeting comprises the 59th Annual Assembly of the African Development Bank and the 50th meeting of the African Development Fund.
It brings together key officials of bilateral and multilateral development agencies, leading academics, and representatives of non-governmental organisations.
Also, civil society, and the private sector to engage in high-level discussions that seek the continent’s socio-economic transformation.
The panel discussion was meant to discuss the balancing of immediate challenges in debt sustainability and financing risks with unblocking long-term prospects in Sub-Saharan Africa (SSA).
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It focused on understanding the complexities of the global financial landscape and developing robust policies and strategies to navigate this evolving environment.
Rijkenberg emphasised the importance of a private sector-driven economy.
He highlighted the important role of integrating private sector financing into government budgets and expenditure priorities across African nations.
“The fact of the matter is that we are not going to loan enough money to get us out of it. There is not enough money to spend on our continent, governments have a huge need for spending when it comes to infrastructure and other needs,” he said.
He further underscored the necessity for the government to prioritize the private sector in its policy formulation and strategic initiatives.
Rijkenberg reiterated that the government will lead with this growth and critical investments to unlock long-term prospects in Africa.
Rijkenberg stated that the African continent is sitting on massive valuable assets in terms of land and minerals, which can be used in smart leverage to access private sector financing.
“There is huge financing sitting on our continent, as well as funding looking for return in the world.
Africa is a continent with a lot of youth and unused land, a lot of potential which the world needs to get in return on the private sector capital sitting out there,” said the Minister.
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He further stated that African governments need to work with the AfDB in leveraging and getting more of what is on the continent, taking private sectors seriously as a top priority.
Rijkenberg said more needs to be done to unlock the private sector and expose them to the AfDB, further referencing his experience in the private sector before he was the Minister of Finance in Eswatini.
“I believe we also need to get the right risk appetite. The local players have a low-risk appetite compared to someone out there because they trust everything, they have invested in in the country their home countries,” he said.
Therefore, governments and multi-lateral banks need to leverage on that and be able to figure out how to use the risk appetite as a multiplying effect to draw down private sector funding in private sector space for companies.
“At the moment, we feel we need infrastructure in place, but if you have a valuable and good business and the road is bad, it will open and get legs.
As a government if we overleverage, we end up having to tax the system like crazy just to repay interest and debt, ultimately you find yourself in a certain cycle that is hard to get out of as a government,” Rijkenberg said.
The Minister said instead a government could lead with the private sector, create taxation possibilities in the country, and use the taxation to build roads.
Rijkenberg emphasized that it is a better taxation rule if a country taxes everyone and uses the taxes for a direct benefit rather than repaying interest and debts all day.
