Africa needs specific steps to address development gaps

By Lyndal Rowlands
Monday, June 29, 2015

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UNITED NATIONS -- Africa has been witnessing sound economic growth over the past 15 years, but the continent needs specific measures to enable its economic progress to better contribute to the painstaking efforts to eradicate poverty, a senior UN official told Xinhua in a recent interview here.

"For the last decade and a half Africa has been growing ( economically) at an average of five percent ... but this growth by and large did not contribute to addressing issues of employment and poverty," Abdalla Hamdok, the deputy executive secretary of the UN Economic Commission for Africa (ECA), said.

Hamdok said that economic gaps -- including illicit financial flows, and shortfalls in investment in industrialization and infrastructure -- need to be addressed in order for Africa to translate economic growth into development.

Originally from Sudan, and currently based in Addis Ababa, Ethiopia, Hamdok spoke to Xinhua in the lead up to the third Financing for Development (FfD) conference set to take place in the Ethiopian capital on July 13-16.

At the meeting, world leaders will aim to reach an agreement to help fund the Sustainable Development Goals, also known as the post-2015 development agenda, which is to replace the Millennium Development Goals, a set of eight anti-poverty targets, by the end of this year.

Hamdok said that there were high expectations that illicit financial flows would be addressed at the meeting. "We are expecting no less than a clear commitment to help the continent to stop this practice," he said. "We very much hope those expectations will be met."

African economies lose an estimated 50 billion U.S. dollars each year to illicit financial flows, although Hamdok said this is a conservative estimate.

"This magical figure of illicit finance that leaves Africa every year is conservatively put at 50 billion U.S. dollars."

This is almost twice the Official Development Assistance that Africa receives every year, he said. "This is a huge sum of resources" that could help address the financing gap for infrastructure, health and education.

According to the ECA report "Track it, stop it, get it", commercial activities, including tax evasion and aggressive tax avoidance account for 65 percent of illicit financial flows leaving Africa.

The Group of 77 (G77) plus China are advocating for tax cooperation and tax avoidance to be addressed at the FfD meeting.

The G77, established in 1964, is now a coalition of more than 130 developing UN member states plus China, and has more than 60 percent of the world's population.

Hamdok also spoke about recent research from the ECA that concluded that industrialization will help African countries to translate economic growth into increased employment.

"We believe that can only come about through industrialization which creates quality jobs to uplift, like what China did, millions of Africans out of poverty," he said.

ECA's "Economic Report on Africa 2015" said that Africa's economic performance of high unemployment and poverty coexisting with robust growth is a paradox that can only be addressed through industrialization.

"Industrialization promises to address this paradox by promoting economic diversification, inclusive growth, efficient utilization of abundant physical, mineral and human resources and in the process eliminate poverty and hence structurally transform Africa economies," the report said.

Meanwhile, Hamdok also touched upon the importance of Chinese investment in Africa.

"If you look at the continent today, I don't think that there is a single African country that is not experiencing or having very serious engagement by Chinese investment, be it in infrastructure, building roads, energy projects," he said.

"If you see Addis where I live -- Addis is an embodiment of Africa transformation which is by and large driven by this partnership between China and the Ethiopian authorities," he said.

"This is happening even when the continent is facing a lot of challenges whether it is on peace and security whether it is issues related to health challenges," he said.

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