Africa loses billions of dollars every year
Addis Ababa, 10 April 2014 (WIC) - African Economic Research Consortium Executive Director Prof. Lemma Woldesenbet said billion of dollars escapes Africa every year due to illicit and licit forms of financial exodus or outflow.
Addressing Senior Policy Seminar under the theme: 'Capital Flight From Africa' here yesterday, Prof. Lemma said Africa has lost a total of trillions of dollars in the form of illicit flow and through multinational corporations managing to make their profit evading taxes over the last forty years.
UN Under-Secretary General and Executive Secretary of Economic Commission for Africa Carlos Lopes said since the height debt crisis in the 1980's, the debate on large private capital outflows from developing countries, particularly from Africa, has become more prominent.
Referring to the estimates of various economic analysts, Carlos said, Africa is losing staggering sums of resources through illicit financial flow. “The biggest tragedy is the fact that African countries are denied resources necessary to meet foreign currency needs,” Carlos said.
He said Africa has an annual infrastructure deficit of 31 billion dollars. "If resources were not leaving Africa, they could be invested through appropriate mechanisms to improve Africa's infrastructural requirements, "Carlos added.
He said: “Africa's fiscal policy space is compromised by shortage of resources. Capital flight is hidden from the tax authorities, limiting Africa's growth. If the funds leaving Africa illicitly were to remain on the continent, Africa's capital stock would have expanded by over 60 per cent and per capital GDP would have been over 15 per cent.”
As to Carlos, the direct consequence of limited resources is the dependency on aid for key investment. “It is critical that Africa addresses that issue of capital flight not only to ensure that money made in Africa stays on the continent but contributes to financing Africa's transformation agenda,” Carlos added.
Senior policy makers from all around the continent, ministers and other economic experts attended the seminar. (EH)
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