The 2010 edition of African Economic Outlook (AEO), a report produced by African institutions in partnership with several international organisations (OECD, AfDB, UNECA, and the EU), was launched last week. It forecasts that the standstill in African economic growth brought about by the financial crisis is set to rebound in 2010. Africa’s average GDP growth, which fell from about 6% in 2006-2008 to 2.5% in 2009, is predicted to rise to 4.5% in 2010 and 5.2% in 2011. However, the setback of the crisis will continue to take its toll on African development in the years to come.

“The good news is that the continent has proved resilient to the crisis. The bad news is that, despite rebounding growth next year, the downturn could make it more difficult for some African countries to meet the Millennium Development Goal of halving the number of people living in poverty by 2015,” said Henri-Bernard Solignac-Lecomte, Head of the Europe, Africa and Middle East Desk at the OECD Development Centre.

The recovery will not come at the same rate across Africa: Southern Africa, which was worst affected by the crisis, is forecast only 4% growth in 2010/2011, while East Africa, which fared best on the continent, could achieve 6% on average in 2010/2011.

“The prospect of only a moderate recovery in a number of African countries makes it even more pressing to address the structural problems which existed even before the global crisis, and which reduced growth potential and led to high poverty levels” said Léonce Ndikumana, Director, Development Research Department, African Development Bank.

The report particularly stresses the need to improve African governments’ capacity to collect and administer taxes, which would greatly increase the resources available for anti-poverty spending.

Martin Hearson of Action Aid welcomes the report, commenting: “The report is strong in its analysis of how tax policy and administration could be improved, the need to diversify tax bases, and taking a tough line on the tax concessions offered to multinational companies.”

“Yet, having identified the use of tax havens for tax avoidance and evasion as a problem, it doesn’t propose any solid international policy solutions. This despite the fact that initiatives such as country-by-country reporting and tax information exchange are being developed by the OECD, one of the authors of the report”, he adds.

Sources:

• African Economic Outlook
• Tax Justice Network
• European Commission