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Plugging illicit financial flows are among solutions mooted by experts to bring the poverty rate of Africa down. Credit: Ignatius Banda/IPSby Ignatius Banda (bulawayo)Wednesday, January 15, 2025Inter Press ServiceBULAWAYO, 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.
However, experts note that for Africa to succeed, robust policymaking will be crucial to ensure adherence to continental protocols that seek to both protect and reclaim lost wealth.
“Policy is not first aid,” said Raymond Gilpin, the United Nations Development Programme (UNDP) Africa’s Chief Economist.
“It’s about building structures for the future,” Gilpin said, highlighting the lack of adequate long-term planning to protect the continent's wealth.
It is, however, not all gloom and doom, as experts have pointed to Africa's young population as offering hope for potential growth despite the lingering challenges.
"We are optimistic because Africa has unique assets: a young, dynamic workforce, vast renewable energy potential, and urbanization," said Caroline Kende-Robb, Director of Strategy and Operational Policies at the African Development Bank (AfDB).
"It’s not all about crises—it’s about opportunity,” she added.
As part of broader efforts to plug the continent's wealth loss, regional technocrats must innovate for governments to adopt implementable evidence-based solutions.
“As leading institutions on the continent, the AfDB, ECA, and UNDP must step up, not just in articulating smart ideas, but in fundamentally rethinking how we operate. The Africa of today is dynamic and evolving—our strategies must evolve with it. This is about action, not aspiration," said Gilpin, the UNDP economist.
For Africa to move past its many challenges, solutions must emerge from within the continent itself, believes Zuzana Schwidrowski, Director of the Macroeconomics, Finance, and Governance Division at the Economic Commission for Africa.
“Africa is not asking for handouts,” Schwidrowski said.
“Every challenge brings with it an opportunity. Amidst global fragmentation and trade wars, Africa has the chance to carve out new niches and seize emerging opportunities. We must work together to capitalize on them.”
Going beyond safeguarding Africa's abundant wealth, more still needs to be explored to spread the continent's revenue base, some experts contend.
“We have the tools to create change, but tools alone are not enough,” said Anthony Simpasa, Director of the Macroeconomic Policy, Forecasting, and Research Department at the AfDB.
“We need practical, evidence-based solutions to transform economies, diversify growth drivers, and build shock absorbers for future crises. Political commitment and policy coherence are critical to creating an environment that fosters growth and resilience,” Simpasa told the conference.
The African Economic Conference, held under the theme Securing Africa’s Economic Future Amidst Rising Uncertainty," was yet another platform where policymakers and experts gathered to map Africa's future, and was met with guarded optimism among some delegates.
“Make sure that this conference does not degenerate into merely a generous exchange of flattery,” said Duma Boko.
“We must act to lift our people from poverty and raise our continent to take its rightful place as a leader in the world, and not just an emerging frontier," Boko said.
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© Inter Press Service (2025) — All Rights ReservedOriginal source: Inter Press Service
