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Foreign Aid Has Made African Countries More Debt-laden, Inflation Prone

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Nana Afadzinu

The West Africa Civil Society Institute (WACSI)‎ has lamented that the foreign aid culture has left many African countries more debt-laden, inflation prone and more vulnerable to the vagaries of the currency markets and more unattractive to higher quality investment.

The Institute’s Executive‎ Director, Ms. Nana Afadzinu made this known in Abuja at the recent 2nd West Africa Civil Policy Dialogue Series, 2016 (WAC-PoDiS) with the theme ‘Financing our Development: Strategies for Domestic Resource Mobilisation for Agenda 2030 in West Africa and the Role of Civil Society’.

Afadzinu noted that foreign aid has also restricted the policy space of many developing countries due to existence‎ of ‘tied aid’ which dictates what a designated piece of funding should be used for, with minimal control by the recipient country.

‎According to her, “in most cases, the restriction is extended to procurement processes with donors dictating where goods and services should be acquired in carrying out a given project, a lot of which sees contracts given to donor country companies to the disadvantage of local goods and services.”

Afadzinu‎ stressed that the current development landscape and the dwindling desire by developed countries to assist developing countries one in form of development aid or the other had made the need for domestic financial resources even more crucial.

She stated: “it is evident that there is need for a mobilisation ‎of resources to move the vision of Sustainable Development Goals (SDGs) beyond rhetoric to reality. This is even more evident in recent times where there is a constant decline in aid and other support for Africa’s development.

“Domestic resource mobilisation has proven to solidify ownership over the development strategy and to strengthen the bonds of accountability between governments and their citizens. This is because locally raised funds give a government full control of designing development programmes and strategies based on the real needs of the people without any influence by external forces.

“The citizenry is also likely to hold its government accountable for the use ‎of the taxes paid in providing the necessary services for the country,” she noted.

Afadzinu‎ emphasised that governments that rely heavily on foreign aid are less inclined to raise local taxes and therefore pay less attention to the demands of their citizens.

The Executive‎ Director noted that in this regard there was more to be said for promoting domestic resource mobilisation as against sourcing funds from external donors.

On his part, the Deputy Director, McArthur Foundation, Mr. Oladayo‎ Olaide said government spending would be the most important source of domestic resource for the SDGs in many parts of West Africa, adding that from the MDGs experience, government spending was more reliable than aid.

He explained that in order to mobilise resources locally, West African countries must block leakages ‎in government revenues through system strengthening and automation of revenue collection system, tax reform to improve computation and collection and review and reform of tax exemptions and concessions.

To help realise the new 17 SDGs on or before the deadline year of 2030, the private sector has been tipped as a major stakeholder in the process, with its huge funds and efficiency identified as vital ingredients for development across the globe.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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China and EU Seek Partnership: Xi Jinping Proposes Key Trade Alliance

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Shipowners

Chinese President Xi Jinping expressed his desire for China and the European Union (EU) to become key trade partners and foster trust in supply chains, during a meeting with EU leaders in Beijing.

The talks marked the first in-person summit between the two sides in four years and addressed a range of economic concerns, including data flows and market access.

Xi emphasized China’s commitment to high-quality development and opening up, positioning the EU as a crucial partner in economic and trade cooperation.

He envisioned the EU as a trusted collaborator in industrial and supply chain cooperation, aiming for mutual benefits and win-win results.

The summit delved into longstanding issues, such as efforts by Europe to “de-risk” its supply chains and the EU’s anti-subsidies investigation into Chinese-made electric vehicles.

China criticized the investigation, urging the EU to avoid using it for “trade protectionism.”

Xi called for the elimination of interference between China and the EU, a statement likely directed at the United States, which has taken actions, including enlisting the Netherlands, to curb China’s development of high-end semiconductors.

The EU leaders, Ursula von der Leyen and Charles Michel, described their conversation with Xi as “good and candid.”

They discussed the main challenges amid increasing geopolitical frictions, emphasizing a commitment to balanced trade relations and pledging to enhance people-to-people exchanges.

During the meeting, Italy formally informed China of its exit from the Belt and Road Initiative, highlighting ongoing strains between the EU and China.

Xi discussed Belt and Road with EU leaders, expressing a willingness to connect it with the EU’s Global Gateway infrastructure plan.

However, deep issues remain, including Russia’s war in Ukraine, trade imbalances, and Chinese overcapacity exported to Europe.

Jens Eskelund, president of the European Union Chamber of Commerce in China, stressed the need to address these issues to foster a positive relationship between Beijing and Brussels.

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UAE Commits $30 Billion as COP28 Climate Talks Kick Off in Dubai

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climate change - Investors King

UAE President Sheikh Mohammed bin Zayed inaugurated the COP28 United Nations climate talks in Dubai on Thursday with a groundbreaking commitment of $30 billion to bolster climate solutions.

Notable world leaders, including Saudi Crown Prince Mohammed Bin Salman, German Chancellor Olaf Scholz, and Brazil President Luiz Inacio Lula da Silva, are scheduled to address the summit.

The unprecedented scale of this year’s COP is evident with tens of thousands of delegates in attendance, making it one of the largest gatherings in COP history.

Beyond politicians and diplomats, the summit attracts campaigners, financiers, and business leaders, providing a diverse platform to address pressing climate challenges.

The urgency of the discussions is underscored by the UN’s declaration of 2023 as the hottest year on record, coupled with the ongoing rise in greenhouse gas emissions.

One early success at COP28 is the agreement among nations on details for managing a fund designed to aid vulnerable countries in coping with extreme weather events intensified by global warming.

Also, rich countries have pledged at least $260 million to initiate this facility.

UAE’s COP28 President, Sultan Al Jaber, announced the launch of ALTERRA, the largest private finance vehicle for climate change, in collaboration with BlackRock, Brookfield, and TPG.

ALTERRA aims to mobilize $250 billion by the end of the decade, with $6.5 billion allocated to climate funds for investments, particularly in the global south.

As the summit unfolds, other pivotal topics include agreements to expand renewables, commitments to phase out fossil fuels, rules for a forthcoming UN carbon market, and the first formal evaluation of global progress in combating climate change since the signing of the Paris Agreement in 2015.

The UAE’s decisive move in financing climate solutions sets a significant tone for COP28, emphasizing the imperative for collective action to address the escalating climate crisis.

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Nigeria Eyes BRICS Membership within Two Years as Foreign Minister Emphasizes Strategic Alignment

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In a strategic move towards global economic collaboration, Nigeria is aspiring to join the BRICS group of nations within the next two years.

The Minister of Foreign Affairs, Yusuf Tuggar, affirmed that Nigeria is open to aligning itself with groups that demonstrate good intentions, well-meaning goals, and clearly defined objectives.

Tuggar stated, “Nigeria has come of age to decide for itself who her partners should be and where they should be; being multiple aligned is in our best interest.”

He emphasized the need for Nigeria to be part of influential groups like BRICS and the G-20, citing criteria such as population and economy size that position Nigeria as a natural candidate.

BRICS, comprising Brazil, Russia, India, China, and South Africa, stands as a formidable bloc of emerging market powers.

In a recent move to expand its influence, BRICS invited six additional nations, including Saudi Arabia, Iran, Egypt, Argentina, Ethiopia, and the United Arab Emirates, to join the group.

Nigeria, as Africa’s largest economy, has been absent from the BRICS alliance, prompting discussions on the potential economic and political advantages the bloc could offer the country.

Analysts have noted that BRICS membership could provide Nigeria with significant leverage on the global stage.

Vice President Kashim Shettima clarified that Nigeria did not apply for BRICS membership after the bloc’s announcement of new members in August.

Shettima emphasized the principled approach of President Bola Ahmed Tinubu, highlighting a commitment to consensus building in decisions related to international partnerships.

As Nigeria eyes BRICS membership, the move is seen as a strategic step towards enhancing its global economic and diplomatic influence.

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