African governments need to tackle corruption and illicit capital flows, which cost the continent more than $580 billion per year, if they want to address a debt approaching $2 trillion, according to the President of the African Development Bank (AfDB), Akinwumi Adesina.
According to Bloomberg, Adesina emphasized that while nations also need access to more concessional financing—and debt restructuring when necessary—containing capital outflows is crucial.
“It doesn’t matter how much water you pour into a bucket if it is leaking,” the official said in Maputo, adding that “if it is possible to reduce illicit capital flight as well as corruption (…), Africa could retain many of these resources and meet its infrastructure needs.”
The AfDB estimated in May that Africa loses about $1.6 billion per day due to what it called “financial leaks.” This figure includes $90 billion per year lost to illicit financial flows, $275 billion “diverted” by multinational companies transferring profits, and $148 billion lost due to corruption.
The continent faces an annual infrastructure gap of up to $170 billion, which is critical for economic development and job creation. However, many governments are facing rising debt service costs, which are at their 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 on public health, the report notes.
Source: Diário Económico
