For better or worse, the financial sector plays a critical role in modern market economies -Thorsten Beck
What could be worse than a feeling of fish not knowing it’s in water? We can readily chuckle on the inside at this prospect, but the truth is that the fish could be the most miserable thing on the face of the earth.
We live in a continent that is richly blessed with nature’s most cherished resources, yet like the fish in the above analogy we don’t feel like we’re imbued with wealth. And I believe that the only proper explanation of our state of affairs is that our leaders have a narrow understanding on developmental issues. Or worse yet, they are ignorant of the emerging fourth industrial revolution on which to capitalize and reap amazing rewards.
The financial sector forms a lifeline for our transformative development. This calls for visionary leadership regarding the idea of financing all forms of development that’ll transform the landscape of our economies. If our economies are to thrive we ought to rethink our efforts in financing endeavors that will have a multiplier effect on our investments. Entrepreneurship has been agreed upon as a catalyst to economic development, so it would be critical that all economic activities receive their due financial support.
To transform our economies, we would be wise in broadening our conception of financial development.
Schumpeter defines financial development as,
“An intermediation process through which entrepreneurial activities are converted to positive economic developmental projects in the economy. Financial development is said to spur entrepreneurial activities, whereas entrepreneurial engagements strengthen financial development, and the importance of entrepreneurial activities to economic development is well known.”
It then becomes clear that development and transformation do not occur in a vacuum. It will definitely require economic undertakings backed up by financial assistance, through which to create more income for furthering development.
As John Hicks noted, “The industrial revolution which brought about unprecedented economic development would be inconceivable without the corresponding revolution in financial innovation.”
Part of transforming our continent would involve ensuring that all member nationals have ownership and leadership in implementing continent-wide sustainable development strategies. To do further justice to the development of our continent through leadership counsels, we would advocate for the adoption of effective continental policies as the cornerstone of a sustainable development financing strategy.
All financing shall be done within the context of national and international policy environments that set rules, regulations and incentives for all actors. Botswana is a typical example of how leadership shall be guided by policy frameworks in enabling both development and transformation.
The economic success of Botswana can precisely be thought of as the by-product of its historical development of institutions. These sought to bring about stability and accountability to the forefront after its independence with the propeller being the desire to adopt as good economic policies as were at its disposal.
It would be virtually impossible, of course, to achieve our futuristic transformations without maximizing the impact of international finances and the matching of financial flow with the most pressing needs. Different sustainable development needs and project individualities require different types of public, private and blended financing.
Therefore, long-term sustainable development investments should be prioritized in our funding efforts. Intergovernmental committee of experts shall issue mainstream sustainable development criteria to guide national financing strategies and budgets and private investment decisions. Finance should support the economic, social and environmental dimensions of sustainable development.
Different sustainable development objectives often overlap. Financing should be designed to exploit synergies and support policy coherence for sustainable development, while taking account of potential trade-offs. Thus, financing instruments can be used to address several policy objectives simultaneously. This would be best coordinated within the context of national sustainable development strategies.
Furthermore, we would have to adopt a multi-stakeholder, people-centered and inclusive approach to achieve tangible results on the ground. This is underlined by the heterogeneity of our constituent national and their differing development contexts.
Consultations with all stakeholders, including civil society and the private sector, will therefore enable governments and policymakers to better appreciate the diverse needs and concerns of people in the formulation and implementation of sustainable development policies at all levels. Transparency and accountability must underpin all financing to enhance legitimacy and effectiveness.