BULAWAYO, Jan 15 (IPS) – Africa loses billions of dollars annually through illicit financial flows, resulting in the continent failing to improve the lives of millions of people despite vast mineral wealth, according to experts.
Agencies say more needs to be done to turn the continent’s natural resources into prosperity at a time governments are struggling to address challenging economic conditions that have spawned high poverty levels.
According to the African Development Bank (AfDB), poverty levels increased in 2022, with 281 million people affected by hunger, up by 11 million the previous year.
The grim data was a cause for concern among experts during the recent African Economic Conference in Gaborone, Botswana, who lamented that despite the continent’s undisputed mineral deposits, such high levels of poverty have persisted.
By tapping into existing natural resources, experts believe this will result in better debt management as countries remain saddled with unserviceable loans.
This is also coming against the background of growing calls for debt forgiveness, as critics say loans from international lenders will burden the continent’s future generations.
“We cannot eat diamonds or bauxite,” said Said Adejumobi, Director of Strategic Planning at the Economic Commission for Africa (ECA).
“Other regions with fewer resources have transformed their economies by adding value to what they produce. Why not us?” Adejumobi added in an address during the Gaborone conference.
The ECA estimates that Africa loses USD 90 billion annually through illicit financial flows, and the plunder has crippled services such as the health sector and infrastructure development.
This loss is also being felt in the continent’s efforts to address lingering debt and unserviceable loans, with ECA noting that the external debt of more than half of African countries will soon exceed USD 1 trillion.
“Sometimes we borrow just to repay previous loans, which is unsustainable,” said Sonia Essobmadje, Chief of the Innovative Finance and Capital Markets Section at the Economic Commission for Africa.
“There’s a need for economic diversification, fiscal discipline, stronger public debt management strategies, and, above all, the establishment of domestic capital markets,” said Essobmadje.
Researchers have long raised concerns about the loss of potential mining revenue to international criminal syndicates where African countries have failed to plug holes that have seen billions of dollars being lost.
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