African Statistical Yearbook 2020: Africa Experienced Strong GDP Growth from 2000 to 2019

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Monday, January 18, 2020 / 3:00PM / By AfDB / Header Image Credit: AfDB


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The Yearbook series is a result of joint efforts by major African regional organizations to set up a joint data collection mechanism of socioeconomic data on African countries as well as the development of a common harmonized database.

 

The Joint African Statistical Yearbook is meant to break with the practices of the past where each regional/subregional organization was publishing statistical data on African countries of the continent in an inefficient way, leading to duplication of efforts, inefficient use of scarce resources, increased burden on countries and sending different signals to users involved in tracking development efforts on the continent.

 

It is expected that the joint collection and sharing of data between regional institutions will promote wider use of country data, reduce costs and significantly improve the quality of the data and lead to better monitoring of development initiatives on the continent.

 

The data in this issue of the Yearbook are arranged generally for the years 2011 to 2019 or for the last nine years for which data are available.

 

The Yearbook is published in one volume consisting of two parts: a set of summary tables followed by country tables.

 

Combating Illicit Financial Flows in Africa

 

Introduction

Africa experienced strong GDP growth from 2000 to 2019, despite declines in commodity prices – including some severe drops in crude oil prices during this period. which particularly affected major oil-exporting countries such as Nigeria. The continent's average growth rate in this period was around 5 percent but with considerable heterogeneity in growth patterns between countries. This came at a time when other global regions were experiencing a decline or stagnation in their economic activity.

 

However, Africa's economic growth in the recent past has not substantially reduced poverty and inequality, nor has it led to job creation. Initiatives to spur industrialization, economic diversification, and the modernization of agriculture have met with limited success. Despite some progress made, in 2018 around 40 percent of the African population was living below the poverty threshold of USD 1.9 per day (World Bank, 2018).

 

With the arrival of the COVID-19 pandemic in early 2020, and subsequent restrictions on sectors such as aviation, which has negatively impacted tourism as well as the export and import of goods, global trade and economic output have been badly affected, with commodity and crude oil prices again taking a hit. Across the globe, the scenario is one of failing companies due to enforced lockdowns, increasing job losses, personal and corporate debt, and increasing poverty.

 

The level of poverty in Sub-Saharan African in particular can only worsen in the short term. Due to the effects of the pandemic, the World Bank estimates that between 26 million and 40 million additional people will have been pushed into extreme poverty in Sub-Saharan Africa during 2020 (World Bank, 2020). Looking to the future, extreme poverty in the African continent will be driven principally by the effects of COVID-19, armed conflict and terrorism, and climate change, which jointly threaten to reverse the gains made in poverty reduction for the first time in a generation. Shifting the focus to the scale of wealth inequality across the African continent and income distribution, six of the ten most unequal countries in the world are located in Africa, particularly in southern Africa, with the GINI coefficient increasing from 0.42 to 0.46 between 2000 and 2010 (AfDB, 2012). Illicit Financial Flows (IFFs) tend to increase intra-country inequalities and global inequalities in development, thereby widening income gaps between developed and developing countries. Some authors have shown that Africa's capital stock would have increased by over 60 percent if funds leaving Africa illegally had remained in the continent, while GDP per capita would have increased by 15 percent.

 

In view of current limited budgetary resources and the scarcity of development aid, African countries need to explore options for mobilizing domestic resources to finance productive activities, generate growth, and mitigate the increasing social demands stemming from the continent's continuing unprecedented population growth. An initial step would be to intensify efforts to combat IFFs and invest recovered funds in social sectors (education, health, and social safety nets, amongst others) in order to rapidly harness the continent's demographic dividend.

 

Illicit financial flows and corruption have long been at the center of discussions on development, both in Africa and at the international level, given the general consensus that they exert significant negative impacts on development financing. Illicit financial flows threaten countries' ability to achieve their national development priorities; they also jeopardize achievement of continental and global commitments such as the African Union's Agenda 2063 and the 2030 Agenda for Sustainable Development.

 

Sources of IFFs include corrupt activities of public office holders and illegal commercial activities, such as tax avoidance and mis-invoicing. It is estimated that Africa loses approximately USD 50 billion annually to IFFs, which is approximately double the Official Development Assistance (ODA) the continent has in the past received from Development Partners. However, this loss of USD 50 billion is considered to be an under-estimation due to the difficulty in obtaining reliable statistics and the secretive nature of such funds.

 

In recognition of the threat posed by IFFs, both Agenda 2063 and the 2030 Agenda for Sustainable Development have identified the reduction of IFFs as one of their top priorities.

 

The African Union (AU) has addressed the issue by establishing a common continental strategy on which national strategies will be anchored, and by advocating for the strengthening of international cooperation in combating tax evasion, money laundering, crime, corruption, false invoicing and the mispricing of imported or exported goods.

 

The African Union's commitment to this strategy was reinforced when it dedicated the year 2018 to combating corruption under the theme of "Winning the Fight against Corruption: A Sustainable Path for Africa's Transformation." This attests to the AU's readiness to combat poor financial governance, which affects the continent's inclusive socioeconomic development, as IFFs represent obstacles to productive investments. This leads to distortions in the allocation of budgetary resources and systematically increases inequalities.


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