1. Resource Mobilization and Structural Transformation Abdoulie Sireh-Jallow Lead Economist, IsDB 2011 African Economic Conference Green Economy and Structural Transformation

2. Format of presentation Structural Transformation Resource Mobilization - Fiscal Space Expansion Traditional (the Usual) Non-Traditional sources (Ethiopian Case) Conclusion

3. Definition Structural Transformation Large scale transfer of resources from some sectors to others in a system, necessitated by fundamental changes in policies or objectives.scaletransferresources sectorssystem fundamentalchangespolicies objectives Why Transfer? How about Creation? Transitioning into a Green economy is a structural transformation How can we fund this?

4. Resource Mobilization From where???? Traditional Sources (the Usual Workhorses) Tax and Non-Tax Revenue ODA Borrowing (External or internal) Efficient management of what we already have And if these are NOT Enough? Non-Traditional Sources of Development Finance to COMPLEMENT traditional ones WHAT is Non-traditional?? Lets look at the Tax Landscape in SSA

5. Revenue sources as % of GDP - SSA Source: Raising Domestic Revenue for MDGs, Terry Mckinley, IPC, UNDP using IMF Statistics

6. Estimated Tax Effort Source: Revenue Mobilization in Developing Countries, IMF (March 2011)

7. Government Revenue as % of GDP in SSA Source: Regional Economic Outlook: Sub Saharan Africa, IMF (Apr, 2011)

8. Very country-specific What is N-T to country A may be Traditional in Country B Examples Carbon Sequestration and Trading Diaspora Bonds Trade in Services Centers of Excellence – Trading Services in the Social Sectors Tourism You can only own your development when you FUND it yourself. What are Non-Traditional Sources?

9. The Case for Ethiopia Source: Min of Finance, Ethiopia, UNDP MP, IMF, Own computations

10. ODA – Gleneagles Scenario Source: Min of Finance, Ethiopia, OECD, Own computation Food and Fuel Crisis FEC

11. Carbon Trading Scenario Source: www.Mongabay.com and own computations

12. Potential Fiscal Space (Select N-T Sources) Source: Prospects of Non-Traditional Sources of Development Finance in Ethiopia, UNDP Ethiopia (2010)(Unpublished)

13. Solar Energy Potential Source: Millennium AG

14. Fiscal space expansion helps in relaxing binding constraints induced growth Catch-22 cycle Non-competitive economy Sub-Optimal Exports Limited Fiscal Space Unfavorable debt sustainability situation Binding Constraints (e.g. Infrastructure Deficit)

15. Conclusion YES WE CAN! YES AFRICA CAN! Analytical Study in only ONE step, the next is a STRATEGIC ACTION PLAN to implement the study recommendations Let us explore and exploit Non-Traditional Sources of Development Finance ( Country-specific ). The more you can fund your development, the more you own your development.

16. Thank You

17. Reference documents Revenue Mobilization in Developing Countries, IMF (March 2011) Regional Economic Outlook: Sub Saharan Africa, IMF (Apr, 2011) Raising Domestic Revenue for MDGs. Why wait for 2015? Terry Mckinley, IPC, UNDP (2007) Prospects of Non-Traditional Sources of Development Finance in Ethiopia, UNDP Ethiopia and CDPR, SOAS (2010) Fiscal Space and Carbon Sequestration in Ethiopia: a potential non-traditional source of development finance to meet the MDGs, Abdoulie Sireh-Jallow (2010)