Experts call for stronger public financial management to boost Africa’s economic resilience

Experts have emphasized the need for robust public financial management (PFM) systems to enhance economic resilience, transparency, and governance across Africa.

Speaking at the second Public Finance Management (PFM) Conference for Africa in Kampala, Keto Kayemba, President of the Pan African Federation of Accountants (PAFA), underscored the pivotal role of accountants in shaping economic stability.

Kayemba stated that while Africa has made commendable strides in PFM reforms, significant challenges persist.

“Public financial management is the bedrock of economic resilience, good governance, and development across Africa,” she said.

Themed “Enhancing Public Finance in Africa: Progress and Prospects,” the conference follows an initial meeting in Nairobi earlier this year and seeks to advance discussions on PFM reforms.

Key strategies outlined by PAFA include empowering Professional Accountancy Organizations (PAOs) to engage with the public sector, building capacity among public sector accountants, and transitioning to accrual-based financial reporting.

“Cash-based accounting allows for corruption and capital flight. We need to shift our focus towards long-term growth and development,” Kayemba emphasized.

Kayemba also identified corruption as a major obstacle to economic progress and called for greater accountability.

PAFA is collaborating with the International Federation of Accountants (IFAC) and other bodies to promote ethical leadership and financial transparency.

Another critical issue raised was Africa’s stagnant tax-to-GDP ratio, which remains at approximately 10% in many countries. Kayemba urged policymakers to increase this ratio to 20% by boosting economic activity and ensuring efficient tax collection.

“The tax duty ratio reflects what we have collected versus what we should have collected. Accountants must ensure businesses understand their financial obligations and comply with tax regulations,” she said.

Kayemba further stressed the importance of supporting small and medium enterprises (SMEs), which form the backbone of many African economies.

She cited Uganda’s Parish Development Model (PDM) as an example where accountants’ expertise is crucial for assessing success and improving tax compliance.

Addressing the continent’s growing debt burden, she emphasized the need for efficient utilization of Africa’s vast natural resources.

“Africa has vast human and natural resources. The key question is how we use these resources to manage debt and drive development,” she noted, highlighting Uganda’s upcoming oil projects as potential game-changers if properly managed.

The conference also tackled the role of financial technology in improving PFM. Kayemba encouraged African nations to embrace digital tools such as artificial intelligence, blockchain, and data analytics to enhance efficiency and curb financial fraud.

“Cyber risk is a growing challenge, and accountants must be equipped to handle it effectively. Collaboration between accounting and IT professionals is essential to mitigate financial fraud,” she warned.

Derrick Nkajja, Secretary and CEO of the Institute of Certified Public Accountants of Uganda (ICPAU), emphasized the role of accountants in shaping Africa’s economic future.

He stressed the importance of statistical data and financial reporting in enabling accurate economic assessments and called for greater collaboration among financial institutions to enhance accountability.

Nkajja also addressed the issue of national debt, questioning whether borrowed funds are being effectively monitored and utilized.

“If we borrow to develop infrastructure, was it completed? If not, we may need to borrow again. If it is not in use, it is not generating revenue to repay the debt,” he explained.

The African Union (AU) Director of Finance Edith Akorfa Lumor called on stakeholders to prioritize transparency, accountability, and collaboration in financial reforms.

"Public financial management is the foundation of sustainable growth in Africa," Lumor stated, urging governments and financial institutions to adopt robust systems that enhance efficiency.

With the African Continental Free Trade Area (AfCFTA) at the center of economic integration, Lumor highlighted the critical role of the accountancy profession in ensuring its smooth implementation.

"Collaboration is essential to achieving tangible results," she emphasized, adding that effective financial management would boost investor confidence and economic stability.

The conference brought together policymakers, financial experts, and development partners to discuss strategies for strengthening fiscal discipline and promoting economic resilience across Africa.