Last week African business and government leaders met in Cape Town at the World Economic Forum on Africa to assess the impact of its growing wealth on alleviating poverty and to address the issue of transparency.
It is well known that Africa’s impressive growth is not shared by millions of its people. Sub-Saharan Africa is home to a third of the world’s poorest people, and six of the top ten most unequal countries in the world.
Africa’s potential is also being undermined by illegal capital haemorrhaging – often in the form of tax evasion by multinational oil, gas and mining companies, and in collusion with corrupt elected officials.
For example, in 2010, Africa’s oil, gas and mineral exports amounted to US$333 billion (BDS$666 billion). However, estimates of illegal financial outflows are up to US$200 billion annually, dwarfing the development aid it receives from developed countries, thereby cheating it of its wealth and development potential.
Such is the consensus of a report produced by a panel of experts who authored and vetted the Africa Progress Report, including former Nigerian President Olusegun Obasanjo and former UN Secretary General Kofi Annan.
The report, considered to be highly authentic and serving as a testimony for investors and policy-makers worldwide, says that tax avoidance, secret mining deals and shady financial transfers are depriving the continent of the benefits of its resources boom.
It goes on to say that Africa loses twice as much money through these loopholes as it gets from donors.
A staggering figure of US$38 billion is what Africa loses every year owing to lack of transparency in businesses and the inability or connivance of governments to make a quick profit out of wheeling and dealing.
Together, income inequalities and illicit capital flows are cheating Africa of its wealth and potential for the investments in education, agriculture and health care needed to support productive citizens. This is hindering productive investments and undermining social and economic progress.
The experts who have spelt out the ailments that obstruct Africa’s growth believe that transparency and good governance will put pressure on governments to account for how they spend money they receive from fees and royalties.
In order to realise a better tomorrow for all Africans the developed world needs to ensure that business with the continent is conducted transparently and under-invoicing is avoided at all costs.
Today’s favourable market conditions provide no guarantee of future success but if governments put the correct economic policies in place, Africa’s resource wealth could permanently transform the continent’s prospects and pull millions out of poverty.
