Adjusting your stride but powering ahead: Africa’s opportunity to ride out the tough times

“We estimate there’s $500 billion hidden in tax havens…enough to educate all the 30 million African children who are currently out of school”

EBOLA, drought and low commodity prices – over the past eighteen months, these three together have put a brake on Africa’s heady, 15-year growth story. As a result sub-Saharan Africa’s projected growth of 3% is lower than the global average – the first time this has happened in nearly two decades.

But there is an opportunity for raising government revenue and consolidating the progress already made, if African governments can rein in tax dodging and harmful tax competition, says Winnie Byanyima, executive director of Oxfam International, speaking at the World Economic Forum on Africa, currently underway in Kigali, Rwanda.

“There’s a huge loss of Africa’s money through tax dodging,” said Byanyima. “We estimate that there’s $500 billion hidden in tax havens. This is enough to educate all the 30 million African children who are currently out of school.” Byanyima was on a panel discussing Africa’s growth, along with Kenya’s president Uhuru Kenyatta, Tony Elumelu, Nigerian businessman and philanthropist, and David Lipton, first deputy managing director of the International Monetary Fund (IMF).

According to Byanyima, another quick win would be in radically improving agricultural and industrial productivity, citing IMF figures.

“Over the past few years, Vietnam and Mozambique have been growing at the same high rate of over 7% annually, but Vietnam has managed to create more than two million new jobs in industry, while Mozambique has only created 160,000 jobs,” said Byanyima, expressing concern that economic growth is often de-linked from poverty reduction and improving living standards of people.

She highlighted the example of Nigeria, where robust growth over the past decade has been accompanied by increasing inequality and vulnerability.

The country’s economic growth has averaged 7.9% between 2000 and 2010, but the share of national consumption of the poorest actually declined during that time – which suggests the poor got poorer. Data from the last comprehensive household survey in Nigeria in 2009/2010 indicated that the official poverty rate stands at 62% of the population in per capita terms; the majority of the poor (66%) are to be found in the north, which contributes to the insecurity in the region.

Kenyatta’s emphasised the need for African governments to invest in people.

“Our wealth isn’t in commodities, it is in our young people,” said Kenyatta. “Africa needs to diversify and especially tap into the productivity of our young people. We must focus on improving productivity and value addition in agriculture, increasing intra-African trade and manufacturing, and boosting services.”

Elumelu has been walking the talk of investing in young people – through the Tony Elumelu Foundation’s flagship $100 million entrepreneurship programme, that seeks to identify and grow 10,000 African entrepreneurs in ten years.

Now in its second year, the foundation identifies 1,000 start-ups across the continent every year, and gives out $10,000 in capital, as well as providing training and networking opportunities.

“This year we received 20,000 applications, but could only select 1,000, so the demand is clearly there. $10,000 is not much, but there’s a chance there for young people to create something bigger with their lives,” said Elumelu.

On his part, Lipton underscored that the focus should be on maintaining macroeconomic stability, as the foundation of economic health.

“For those countries that are still growing, they should adjust their stride but power ahead,” said Lipton. “That means being careful to prioritise health and education, continue investing in infrastructure, and keeping exchange rate systems flexible so that the financial system can quickly respond to challenges.”

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