| World Bank IMF and Dev Agencies |    1278 VIEWS  |
| World Bank IMF and Dev Agencies | |
| 1278 VIEWS | |
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Monday, January 18, 2020 / 3:00PM / By AfDB / Header Image Credit: AfDB
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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