Dr. Patricia Ojangole, Managing Director of Uganda Development Bank, has called on African leaders to tap into domestic resources to drive economic growth and reduce reliance on foreign loans.
She says this approach can help unlock affordable financing, catalyze public and private investments, and promote sustainable development.
Speaking during a panel discussion at the Speke Resort Convention Centre, Munyonyo, today, on the sidelines of the Eleventh Session of the Africa Regional Forum on Sustainable Development, Dr. Ojangole noted that most countries have pools of resources that they never use but instead borrow from abroad.
She highlighted the need for African governments to tap into domestic resources to unlock the affordable financing required to catalyze public and private investments, instead of always seeking expensive loans from international lenders.
“In Uganda, we have lots of domestic resources, like in commercial banks and pension funds, banks are sitting with a lot of liquidity, and we have money in pension funds. We need to find ways of unlocking that capital, through our capital markets, to support private investments and the public,” she said.
“While concessional funds are available, there are often issues around access, especially regarding the processes involved, from country limits to issues around authorization,” she added.
Dr. Ojangole also observed that for some concessional sources, the long and often complex accreditation processes limit access to these funds, noting that this complicates the serious issues regarding the cost of capital, especially from private sources.
The panel discussion, which focused on mobilizing private investment at scale to Africa’s priorities, also featured insights from Akin Adigun, Principal Investment Officer at Capital Markets, Financial Sector Development at Africa Development Bank, Sanjay Rughania, CEO of Standard Chartered Bank Uganda, and Christopher Clubb, Managing Director of Convergence.
Potential of Domestic Resources
She noted that Africa has significant domestic resources that can be leveraged for development, including:
Commercial Banks
Dr. Ojangole observed that excess liquidity in commercial banks can be channeled into development projects.
Pension Funds
She explained that pension funds can be invested in long-term development projects, providing a stable source of funding.
Capital Markets
As another pool for resources, Dr. Ojangole said that developing capital markets can help unlock domestic capital and support private investments.
Benefits of Domestic Resource Mobilization
Mobilizing domestic resources can have numerous benefits, including:
Reducing Debt Burden
By relying less on foreign loans, countries can reduce their debt burden and free up resources for development projects.
Increasing Investment
Domestic resource mobilization can lead to increased investment in key sectors, such as infrastructure, education, and healthcare.
Promoting Economic Growth
By leveraging domestic resources, countries can promote economic growth, create jobs, and improve living standards.
Challenges and Opportunities
According to Dr. Ojangole, while there are challenges to domestic resource mobilization, such as complex accreditation processes and limited access to concessional funds, there are also opportunities for growth and development.
For instance, the African Union’s Agenda 2063 and the United Nations’ Sustainable Development Goals (SDGs) provide a framework for development, and initiatives like the African Tax Administration Forum and the Medium-Term Revenue Strategies can help improve tax collection and revenue mobilization.
Reiterating Dr. Ojangole’s words, unlocking domestic resources is crucial for Africa’s sustainable development and economic growth.
By tapping into domestic resources, countries can reduce their reliance on foreign loans, increase investment, and promote economic growth.
Hence, African leaders must work together to address the challenges and opportunities in domestic resource mobilization and create a more prosperous future for the continent.