By Mirian Lima
In today's global development landscape, the intertwined nature of economic and digital transformations presents an unparalleled opportunity for Africa. These two facets of modern sustainable development policy-making, often considered in isolation, are indeed two sides of the same coin. Moreover, the symbiotic relationship between them may hold the key to unlocking the continent's potential for prosperity.
When it comes to sustainable development, digital technology, while a marvel in its own right, is not an end in itself, but a means to an end. It requires the guidance of a strategic blueprint to steer digital advancements towards meaningful socio-economic outcomes. This is akin to how digital strategies are informed and guided by business plans in the private sector. In this context, the value of digital technology lies in its purposeful application towards achieving economic transformation.
Economic transformation, simply defined, involves reallocating economic resources from sectors of low productivity to those of higher productivity. A definition offered by the Overseas Development Institute (ODI) encapsulates a more substantial definition:
“SET broadly defines economic transformation as a process moving labour and other resources from lower to higher productive activities. This includes moving between sectors towards higher value activities (such as from agriculture to manufacturing) and within sectors (such as from subsistence farming to high-value crops), and usually involves diversification and increased value addition in export activities.”1
Digging into this definition is crucial, as it provides the strokes of a mission that should equally inform economic and digital transformation objectives. Firstly, the definition is anchored on the strategic redistribution of labor as a key driver of overall productivity enhancement. Secondly, it introduces a framework for labor mobility within and across sectors, raising important questions, such as, for instance, which sectors benefit most from different types of labor movement (within or across sectors), or whether optimal labor reallocation depends on workforce characteristics or job nature. Finally, it hints at economic goals that are likely to steer effective policy making towards economic transformation, namely, economic diversification and increasing value addition in export activities.
We, at the Office of the Special Advisor, have been echoing the voice of OSAA’s Under Secretary General (USG), Cristina Duarte, on the crucial importance of economic diversification and improving African economies’ ability to add more value to global value chains (GVC). We do also add a caveat: productivity gains across the board, at rapid pace, can only be accomplished by raising the productivity of all human capital. More plainly, all families need to be supported in their quest for unfettered and adequate access to markets and to realize their own economic strategies for themselves, be it as plentiful members of the active workforce or as business owners. This brings another dimension that needs to keep pace with economic growth, which is economic redistribution, i.e., targeted policy making which address socio-economic concerns such as education poverty, working poverty, etc. To sum it up: economic transformation should be understood to stand for a broad and sustained increase in overall productivity, which ought to inform strategies that lead to more diversified economics, but which also specifically target bridging the .
Central to this vision is the requirement for strong Domestic Resource Mobilization (DRM) institutions, within the broader context of Public Financial Management (PFM), which is also a primary focus for USG Duarte and one of her top priorities. DRM (and, more broadly, PFM) stands out not only due to the structured nature of its own governance and its history of data and digital prowess, but as a catalyst for cross-cutting improvements in public administration. The expected spillover effects of well-executed PFM reforms—ranging from enhanced efficiency and transparency to improved public service delivery—underscore the transformative potential of integrating digital strategies with sound economic planning. This is the core of the message that we hope to contribute to the global debate, be it at the African Union Summit, the Summit of the Future or anywhere else.
However deep our enthusiasm is on this matter, alas, we must recognize that navigating this integration is no simple task. It requires a systematic approach to PFM that encompasses all stages of public policy making: planning, execution, evaluation, reporting, and the iterative application of lessons learned to the next cycle. This process embodies the essence of evidence-based public action, and fosters a virtuous cycle of incremental and substantial gains through evidence-based learning and experimentation—a cornerstone of effective public policy and administration.
The path towards leveraging these evidence-based strategies for economic transformation, through DRM and digital strategies, is fraught with complexities and necessitates patience. The accumulation of these incremental gains need time to mature and yield significant economic results. The wealth of knowledge on DRM and digital transformation, accumulated through extensive research by international organizations such as the UN, World Bank, Addis Tax Initiative (ATI), IMF, and many more, provides a solid foundation for moving forward. Yet, the bulk of the challenge still lies in translating this breath of knowledge into actionable strategies, with fair chances of successful implementation.
What Africa urgently needs is a coordinated, cohesive approach to DRM and digital transformation, under a unified conceptual framework of economic transformation. This entails bringing together various international, and national, stakeholders around one table in order to harmonize efforts by drawing upon a comprehensive inventory of existing initiatives, policy guidelines, and international public goods. Our proposition to the African Union—an African DRM Coalition—aims not to reinvent the wheel. The goal is to synergize the extensive technical expertise and resources available globally into an Pan-African strategic and operational DRM framework that prioritizes long-term, sustainable development, propelled by economic and digital transformation.
Furthermore, this coalition should seek to advance sustainable financing, a concept tirelessly stressed by our own USG, which is essential for reclaiming control of financial flows and fiscal space necessary for long-term planning. Sustainable Financing, as OSAA defines it, calls for a shift from focusing solely on debt levels to a focused tracking of financial flows, enhancing financial predictability and, thus, enabling strategic public investments that yield compounded economic growth with inclusive redistribution.
In conclusion, the journey towards a prosperous future for Africa hinges on our ability to effectively merge economic and digital transformations within a cohesive, strategic framework for DRM. By fostering sustainable financing and prioritizing investments that drive equitable economic growth, we can reclaim control of our financial conditions and pave the way for a thriving continent.
Notes:
[1] ODI website about page, , accessed 02/21/2024