According with the vision developed by AfDB, good economic and financial governance is receiving increasing attention against the background of higher aid flows, debt relief, and increasing revenues from natural resources in Africa. Competent, transparent and accountable public financial management is considered a central element of a functioning democracy, while weaknesses in this field, hampers sustainable development, investment, and economic growth.
Transparency, participation, and accountability that come from an empowered citizenry are the strongest antidotes to corruption. In addition to other governance issues, Good Economic and Financial Governance (GEFG) is therefore of particular importance as it is connected to to the achievement of the Millennium Development Goals (MDGs).
Many African countries have already made important progress in public financial management. In recent years, public expenditure management in several countries has improved, regulatory and supervisory bodies have been strengthened, and tax systems have been reformed towards internationally recognized standards of good fiscal practice. As a result, Africa is, today, performing much better than a decade ago and African economies continue to sustain the economic growth momentum which has been built up in recent years.
However, the progress is still insufficient (measured against international comparators) and uneven with limited institutional and human capacity proven to be major obstacles. Reforming public institutions is about establishing new binding rules and constraints; the task is to establish those incentives and accountability systems, which lead people to adhere to these rules. Successfully advancing public sector reforms therefore depend on sustained political commitment and respective communication.
As the African Union (AU) has stressed in its New Partnership for Africa’s Development (NEPAD) programme, African countries accept that responsibility for peace, development, good governance and transparent, sustainable financing of the public sector lies with them. In order to assume this responsibility at both the national and regional levels, they need the required capacity and institutions. The Bank Group is promoting and supporting the establishment and strengthening of these institutions. In this context, African finance ministers endorsed the Abuja Commitment to Action in 2006 and called for long term predictable financing as part of efforts by African countries for transparent and reliable budget management.