ACET on Africa’s economic recovery plan beyond the COVID-19 crisis

The COVID-19 crisis has taken a heavy toll on African economies, reversing years of progress and posing significant challenges to the continent's economic stability. To address these pressing issues, CNBC Africa sat down with Mavis Owusu-Gyamfi, the Executive Vice President of the African Center for Economic Transformation, to discuss policy measures that African governments can implement to facilitate economic recovery and foster sustainable growth post-COVID-19. Owusu-Gyamfi highlighted several key areas that governments need to focus on to effectively rebuild their economies. First and foremost, as countries transition into the restructuring phase, governments must prioritize measures to boost voluntary compliance. This entails demonstrating competence, accountability, and fairness to strengthen the social contract between taxpayers and the government. By increasing transparency in how tax revenues are utilized, taxpayers are more likely to willingly comply with tax obligations. Simplifying tax collection processes by leveraging digital tools, such as online filing systems, can enhance tax collection efficiency and reduce administrative costs, thereby minimizing leakages within the tax system. Furthermore, addressing tax exemptions and implementing measures to counter tax evasion can significantly increase annual revenues, offering governments the opportunity to broaden their tax base to include the informal sector. Another critical issue highlighted by Owusu-Gyamfi is the need to rationalize government wage bills that often consume a substantial portion of revenue receipts in many African countries. While acknowledging the importance of compensating essential frontline workers, she emphasized the necessity of implementing reforms to enhance the efficiency of the public sector. By streamlining the size of the public service, leveraging technology to boost productivity, and fostering transparency within the public service, governments can optimize resource allocation and drive long-term savings. Moreover, the rising debt levels among African nations pose a significant threat to economic sustainability. Owusu-Gyamfi underscored the importance of adopting policy measures to address escalating debt burdens. Recommendations included extending debt service suspension initiatives, issuing additional special drawing rights to facilitate low-interest borrowing from the IMF, and implementing strategies to streamline expenditure and reduce duplication across government programs. By enhancing private sector engagement and promoting investment in infrastructure projects through public-private partnerships, African governments can alleviate debt pressures and pave the way for sustainable economic growth. Furthermore, leveraging digital innovations to accelerate economic transformation and job creation emerged as a key strategy outlined by Owusu-Gyamfi. By encouraging venture capital funding for entrepreneurs, fostering collaboration within the innovation ecosystem, and developing comprehensive digital innovation policies, governments can harness the potential of technology to drive economic diversification and create employment opportunities, particularly benefiting women in the digital sector. In conclusion, as African nations navigate the complexities of post-COVID-19 economic recovery, proactive policy measures are essential to rebuild resilient economies, foster innovation, and stimulate sustainable growth. By prioritizing transparency, efficiency, and strategic investments, governments can lay the foundation for a more prosperous and inclusive economic future on the continent.