President of the African Development Bank (AfDB), Dr Akinwumi Adesina, has called on African governments to end corruption and illicit capital flows that cost the continent more than $580 billion annually.
Adesina, in an interview with Bloomberg in Maputo, Mozambique’s capital, maintained that if African leaders are to deal with a debt pile that’s approaching $2 trillion, it must begin to take visible action to end sleaze.
While nations also need access to more concessional financing — and debt-restructuring where necessary — curbing outflows is crucial, Adesina, the lender’s president said.
Illicit financial flows and rising debt have become two of the most pressing challenges facing African economies today. Every year, the continent loses money through illegal channels such as tax evasion, trade misinvoicing, corruption, smuggling, and money laundering.
These outflows drain resources that could otherwise fund infrastructure, education, health, and job creation. According to international estimates, Africa loses more through illicit financial flows than it receives in aid and foreign direct investment combined.
At the same time, Africa’s debt burden has risen to worrisome levels as many countries continue to spend a growing portion of their revenues servicing external loans, leaving little fiscal space for social investment.
“It doesn’t matter how much water you pour into a bucket if the bucket is leaking,” he said during the interview. “If you’re able to reduce the leakages to illicit capital, also corruption and all of these things, Africa will be able to keep a lot of these resources and meet the amount of infrastructure it needs,” Adesina added.
The AfDB estimated in May that Africa loses about $1.6 billion daily to what it termed “financial leakages.” That figure includes the loss of $90 billion a year to illicit financial flows, with $275 billion “siphoned away” by multinational corporations shifting profits, and $148 billion going astray because of corruption.
The continent faces an annual infrastructure backlog of as much as $170 billion — which will be critical to address for economic development and job creation, the Bloomberg report said.
Yet many governments are grappling with the rising cost of servicing loans, which is at the highest level since the last debt crisis in the early 2000s, according to a working paper by the Boston University Global Development Policy Center and the Institute for Economic Justice.
More than half of African governments spend more on interest payments than public health, the working paper found.
Source – Bloomberg
