Attention to Ethiopia (Africa): Corruption ‘impoverishes and kills millions’

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Corruption ‘impoverishes and kills millions’

 

Pile of dollars (file picture)
BBC (4 September 2014) The ONE group says money lost because of corruption would otherwise be spent on school and medicine. An estimated $1tn (£600bn) a year is being taken out of poor countries and millions of lives are lost because of corruption, according to campaigners.A report by the anti-poverty organisation One says much of the progress made over the past two decades in tackling extreme poverty has been put at risk by corruption and crime.

Corrupt activities include the use of phantom firms and money laundering. The report blames corruption for 3.6 million deaths every year.

If action were taken to end secrecy that allows corruption to thrive – and if the recovered revenues were invested in health – the group calculates that many deaths could be prevented in low-income countries.

Corruption is overshadowing natural disasters and disease as the scourge of poor countries, the report says.

One describes its findings as a “trillion dollar scandal”.

“Corruption inhibits private investment, reduces economic growth, increases the cost of doing business and can lead to political instability,” the report says.

“But in developing countries, corruption is a killer. When governments are deprived of their own resources to invest in health care, food security or essential infrastructure, it costs lives and the biggest toll is on children.”

The report says that if corruption was eradicated in sub-Saharan Africa:

  • Education would be provided to an additional 10 million children per year
  • Money would be available to pay for an additional 500,000 primary school teachers
  • Antiretroviral drugs for more than 11 million people with HIV/Aids would be provided

One is urging G-20 leaders meeting in Australia in November to take various measures to tackle the problem including making information public about who owns companies and trusts to prevent them being used to launder money and conceal the identity of criminals.

It is advocating the introduction of mandatory reporting laws for the oil, gas and mining sectors so that countries’ natural resources “are not effectively stolen from the people living above them”.

It is recommending action against tax evaders “so that developing countries have the information they need to collect the taxes they are due” and more open government so that people can hold authorities accountable for the delivery of essential services.

Read more @ original source:

http://www.bbc.co.uk/news/world-africa-29049324

http://www.bbc.co.uk/news/world-29040793

Poverty & Ethiopia: Poverty on the Streets of Finfinnee (Addis Ababa)

 

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Poverty on the Streets of Addis Ababa

Published on September 1st, 2014 | by Meredith Maulsby

September 2, 2014 (The baines report) — Poverty can easily be seen throughout the capital of Ethiopia, but nowhere is it more evident than when you pass a beggar on the street.  Beggars are everywhere in Addis Ababa, and they represent a vast range of demographics. There are men, women, children of all ages and conditions– some with their mothers, some without, and the severely disabled.

Older children, rather than begging, try to sell you gum or clean your shoes, while the younger children walk in front of you asking for money or food, not leaving you until they spot another person to ask.  The women are often with young children, sometimes babies, and usually with more than one.  I was once walking down the street and a young child no older than 2 or 3 who was being held by his mother made the signal they all make to ask for food or money while calling me sister.  I thought this child probably learned this signal before he even learned how to speak.  Women are often seen grilling corn on the sidewalk on a small grill to sell to people passing by.

I have been told the severely disabled have most likely suffered from stunting, polio or the war.  I have seen men with disfigured legs so mangled that they can not walk but instead drag themselves down the sidewalk. Others are in wheelchairs and unable to walk.  And this city is not easy for the disabled.  The sidewalks, where they exist, are not always flat and not always paved. There are also often giant holes in the middle of the sidewalk or loose concrete slabs covering gutters.  On the main roads, near where I’m staying there are tarps and blankets off to the side of the road where the beggars must sleep or live.

It is a very difficult scene to walk through.  You want to help them all and give everyone a little bit of money or food. But there are so many it would be nearly impossible to give to them all.  We have been told to not give to beggars because once you give to one you will be surrounded by others.  When people do give money to beggars it is often very small bills or coins that will not go very far.

I have often wondered how much money they actually receive. Perhaps it would be beneficial to do more in depth look at why these people became beggars and where they come from. After a cursory search for research and reports on beggars in Addis Ababa, I found very little.  There is a study on the disabled beggars and a report focusing on children.  There is a documentary that follows two women who come to the capital from a rural town and become beggars in order to raise money for their family when climate change creates a food shortage.

Both the government of Ethiopia and large NGO’s, like USAID and the UN, are working to stop the “cycle of poverty.”   There are major health and nutrition projects being implemented all over the country, but these are long-term projects that do not address the immediate needs of people on the streets. Short term solutions such as creating shelters or centers for the disabled and homeless could allow beggars more opportunities for housing but could also generate income potential through workshops and other skill development programs.

Source: The baines report

http://ayyaantuu.com/horn-of-africa-news/ethiopia/poverty-on-the-streets-of-addis-ababa/

Government media in Ethiopia vs Scholars view of development: A stand-off paradox

 

OEthiopia

 

 

 

Government  media in Ethiopia vs Scholars view of development: A stand-off paradox

Ameyu Etana*

 

It has been more than a decade since DEVELOPMENT became a buzzword in Ethiopian Radio  and Television Agency

As ERTA is a pro-government media and are sponsored by the state, there is a strong probability to be under the guise of social responsibility theory when addressing issues. As it is common of using development journalism as an instrument in developmental states, likewise, the Ethiopian government is using media as a big power to making the public participating in development.  Television Agency (ERTA) and other media that are pro-government but run under the auspices of private media. Regrettably, probably, it is the most abused and corrupted word beyond what one could imagine. A name developmentalist came to develop a negative connotation for a journalist in Ethiopia. Quite number of academic researches has been done on the single nationwide media in Ethiopia, however; very little of them adduced and proved the professional nature of political power house of Ethiopian government, ERTA.

Ethiopia, a nation came to be a laboratory of political economy is a dish for choose and pick philosophy of politics. The political economy of Ethiopia is democratic developmental state. By their nature such states are repressive. And there has never been a country both democratic and developmental at a time except Ethiopia. Nevertheless, it seems, what we are seeing is not in accord with the political economy.

The Ethiopian government adopted United Nations General Assembly Resolution 41/128:1986. Alike, the right to development is one of the bill rights that had been included in the federal constitution of Ethiopia. Article 43 of FDRE constitution could depict this. To the contrary, mostly, what has been written and what has been practiced seems contradict each other.

As we know, what Ethiopian Television, Ethiopian Radio, Ethiopian Herald, Addis Zemen, Bariisaa, Ethiopian News Agency, Walta Information Center and other government driven media and/or news agency in Ethiopia and other whose names called under the guise of private but pro-government media view development as econometric (statistics use to view development e.g. economic development) view of development. As a result, any report that put Ethiopian development in number presumed to have high political benefit and get the major attention as it makes a headline. Infrastructure, number of investors, their capital, the KM of a road built, export and import quantities, number of graduates, number of higher institutions, and others are mostly at the desk of those media institution. Hence, what is seen is not the human side but the growth side as it uses to be.

Since the philosophy of state media in Ethiopia is development journalism, though wrongly interpreted, the issue of development vastly and exhaustively reported in a form of news, program, documentary, and other types of reports. However, most news are just a report as they lack interpretation while the journalist acts as a conduit than the one who produce it. I.e. Ethiopia is amongst the fastest growing economy in the world though third of its population lives in absolute poverty. In addition, there is been a big unequal economic distribution in the country and unemployment is getting higher albeit it is repeatedly told it is non-oil economy. If so, what is the benefit of jobless growth? Moreover, indigenous knowledge is ignored at the same time modern technology is also getting little attention by farmers, which is discrepancy right now in the country. As the journalism model, those media were supposed to critically examine and meticulously analyze issue that matters most to the people than merely reporting it.

The people of the country have long experienced the use of development for propaganda. Owing to this, it is difficult to identify the real concept of development in the mind of citizens. This resembles the sedative nature of the media in the country. Recently, journalists of Oromia Radio and Television Journalists (ORTO) did a deliberation on the controversial master plan of Addis Ababa, however, regrettably, they got an axe for the mere fact they did speak their mind. Hence, we can say that development is like politics in Ethiopia as it is untouched area to be opened for deliberation.

After all what is development? What scholars say about development? 

Several scholars held a debate for decades on what development is until they came to, probably; seems agree as it is all about human development. Lamentably, as Rita Abrahamsen puts it in her book called Disciplining Democracy: Development Discourse and Good Governance in Africa the issue of development became politicized, which is unfortunate as the world came to see help poor countries based on their political ideology they might have than favoring solely for being human.

The leading professor Amartya Sen in his book Development as Freedom which was published in 1999 argues development should be seen as a process of expanding the real freedoms that people enjoy. He contrasts the view of development with the widely prevalent concentration on the expansion of real income and on economic growth as the characteristics of successful development. Poverty, the flip side of development, means capability deprivation that inhibits citizen’s freedom to live, the reason they value most. As a result, development means an expansion of freedom.

For Amartya Sen Poverty is lack of choice, socioeconomic and political deprivation while development is a freedom or emancipation from poverty, empowerment of the people. Therefore, we simply understand us development is all about a people than merely numbers.

Similarly Michael Todaro in his book Economic Development argues that development must be seen as multidimensional process involving major changes in social structure, popular attitudes, and national institutions as well as the acceleration of economic growth, the reduction of inequality and the eradication of absolute poverty. And several scholars including Thomas Alan and others believed development is about empowering and emancipating people from the agony that make them suffer most than ignoring their existence.

Having looked at this, inopportunely we see the paradox in Ethiopia. In the name of development people has been ignored freedom; few are benefiting but millions are joining poverty if not struggling to survive. Rather than sensitizing them the media is pursuing sedative under the auspices of development as submissive people at large are being produced in the country seeing that the issue of development became not open for discussion and untouchable. Regrettably, in the name of investment and several projects, millions are being displaced from the land they presumes their only property they got from their forefathers but, are treated like ignorant who could serve nothing for the development. I.e. it is the residents of Addis Ababa that were deliberating over the contentious master plan for days on the lands of farmerssurrounding Addis Ababa. How could this be the right way? By no means it is democratic or developmental? It is highly nonsense and absurd but not surprise as it uses to be in the country.

If development is for the people why do ignore them or why to treating them as against development? By its nature development is not merely road or building, it is about mind development. If the big asset for human, which is mind is not well set, how to manage the entire infrastructure? It seems everything is messed up in Ethiopia. Due to this, the wider public is feeling ignorant to the plans and strategies the government drafts each time.

Consequently, here in Ethiopia, under the guise of development thousands get prisoned, displaced, ignored, dehumanized, unnerved, denied capability, bottled in poverty, whereas, few get rich, empowered, emancipate in such a way to fasten andwiden the gap of living standards of citizens, which is shockingly inhuman. Inconveniently, for the development gained it is not the people but a party or officials get recognition as personal cult is common so far.

The other vital issue we should pay attention to is making the people the participant when the plan is drafted which mean making the people the source of development. If doing so, those who decide by themselves become responsible for the accomplishment, which is a big benefit for the ruled and for the ruler. However, this was not happening rather the people are assumed as ignorant mass that could have no role prior to drafting of the plan but after. http://mohiboni.blogspot.co.uk/2014/08/government-herd-media-in-ethiopia-and.html

*Ameyu Etana is a journalist in Ethiopia and by now he is a graduate student at Addis Ababa University. Can be reached at: ameyuetana@gmail.com  You can follow and comment on his articles on mohiboni.blogspot.com and mohiboni.wordpress.com. All are encouraged to challenge. Any idea is welcomed as far as it has adduced. 

 

False accounting & the great ‘poverty reduction’ lie

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Poverty

Exposing the great ‘poverty reduction’ lie

Jason Hickel* @ Aljazeera Opinion

 

The UN claims that its Millennium Development Campaign has reduced poverty globally, an assertion that is far from true.

 

 

The received wisdom comes to us from all directions: Poverty rates are declining and extreme poverty will soon be eradicated. The World Bank, the governments of wealthy countries, and – most importantly – the United Nations Millennium Campaign all agree on this narrative. Relax, they tell us. The world is getting better, thanks to the spread of free market capitalism and western aid. Development is working, and soon, one day in the very near future, poverty will be no more.

It is a comforting story, but unfortunately it is just not true. Poverty is not disappearing as quickly as they say. In fact, according to some measures, poverty has been getting significantly worse. If we are to be serious about eradicating poverty, we need to cut through the sugarcoating and face up to some hard facts.

False accounting

The most powerful expression of the poverty reduction narrative comes from the UN’s Millennium Campaign. Building on the Millennium Declaration of 2000, the Campaign’s main goal has been to reduce global poverty by half by 2015 – an objective that it proudly claims to have achieved ahead of schedule. But if we look beyond the celebratory rhetoric, it becomes clear that this assertion is deeply misleading.

The world’s governments first pledged to end extreme poverty during the World Food Summit in Rome in 1996. They committed to reducing the number of undernourished people by half before 2015, which, given the population at the time, meant slashing the poverty headcount by 836 million. Many critics claimed that this goal was inadequate given that, with the right redistributive policies, extreme poverty could be ended much more quickly.

But instead of making the goals more robust, global leaders surreptitiously diluted it. Yale professor and development watchdog Thomas Pogge points out that when the Millennium Declaration was signed, the goal was rewritten as “Millennium Developmental Goal 1″ (MDG-1) and was altered to halve the proportion (as opposed to the absolute number) of the world’s people living on less than a dollar a day. By shifting the focus to income levels and switching from absolute numbers to proportional ones, the target became much easier to achieve. Given the rate of population growth, the new goal was effectively reduced by 167 million. And that was just the beginning.

After the UN General Assembly adopted MDG-1, the goal was diluted two more times. First, they changed it from halving the proportion of impoverished people in the world to halving the proportion of impoverished people in developing countries, thus taking advantage of an even faster-growing demographic denominator. Second, they moved the baseline of analysis from 2000 back to 1990, thus retroactively including all poverty reduction accomplished by China throughout the 1990s, due in no part whatsoever to the Millennium Campaign.

This statistical sleight-of-hand narrowed the target by a further 324 million. So what started as a goal to reduce the poverty headcount by 836 million has magically become only 345 million – less than half the original number. Having dramatically redefined the goal, the Millennium Campaign can claim that poverty has been halved when in fact it has not. The triumphalist narrative hailing the death of poverty rests on an illusion of deceitful accounting.

Poor numbers

But there’s more. Not only have the goalposts been moved, the definition of poverty itself has been massaged in a way that serves the poverty reduction narrative. What is considered the threshold for poverty – the “poverty line” – is normally calculated by each nation for itself, and is supposed to reflect what an average human adult needs to subsist. In 1990, Martin Ravallion, an Australian economist at the World Bank, noticed that the poverty lines of a group of the world’s poorest countries clustered around $1 per day. On Ravallion’s recommendation, the World Bank adopted this as the first-ever International Poverty Line (IPL).

But the IPL proved to be somewhat troublesome. Using this threshold, the World Bank announced in its 2000 annual report that “the absolute number of those living on $1 per day or less continues to increase. The worldwide total rose from 1.2 billion in 1987 to 1.5 billion today and, if recent trends persist, will reach 1.9 billion by 2015.” This was alarming news, especially because it suggested that the free-market reforms imposed by the World Bank and the IMF on Global South countries during the 1980s and 1990s in the name of “development” were actually making things worse.

This amounted to a PR nightmare for the World Bank. Not long after the report was released, however, their story changed dramatically and they announced the exact opposite news: While poverty had been increasing steadily for some two centuries, they said, the introduction of free-market policies had actually reduced the number of impoverished people by 400 million between 1981 and 2001.

This new story was possible because the Bank shifted the IPL from the original $1.02 (at 1985 PPP) to $1.08 (at 1993 PPP), which, given inflation, was lower in real terms. With this tiny change – a flick of an economist’s wrist – the world was magically getting better, and the Bank’s PR problem was instantly averted. This new IPL is the one that the Millennium Campaign chose to adopt.

The IPL was changed a second time in 2008, to $1.25 (at 2005 PPP). And once again the story improved overnight. The $1.08 IPL made it seem as though the poverty headcount had been reduced by 316 million people between 1990 and 2005. But the new IPL – even lower than the last, in real terms – inflated the number to 437 million, creating the illusion that an additional 121 million souls had been “saved” from the jaws of debilitating poverty. Not surprisingly, the Millennium Campaign adopted the new IPL, which allowed it to claim yet further chimerical gains.

A more honest view of poverty

We need to seriously rethink these poverty metrics. The dollar-a-day IPL is based on the national poverty lines of the 15 poorest countries, but these lines provide a poor foundation given that many are set by bureaucrats with very little data. More importantly, they tell us nothing about what poverty is like in wealthier countries. A 1990 survey in Sri Lanka found that 35 percent of the population fell under the national poverty line. But the World Bank, using the IPL, reported only 4 percent in the same year. In other words, the IPL makes poverty seem much less serious than it actually is.

The present IPL theoretically reflects what $1.25 could buy in the United States in 2005. But people who live in the US know it is impossible to survive on this amount. The prospect is laughable. In fact, the US government itself calculatedthat in 2005 the average person needed at least $4.50 per day simply to meet minimum nutritional requirements. The same story can be told in many other countries, where a dollar a day is inadequate for human existence. In India, for example, children living just above the IPL still have a 60 percent chance of being malnourished.

According to Peter Edwards of Newcastle University, if people are to achieve normal life expectancy, they need roughly double the current IPL, or a minimum of $2.50 per day. But adopting this higher standard would seriously undermine the poverty reduction narrative. An IPL of $2.50 shows a poverty headcount of around 3.1 billion, almost triple what the World Bank and the Millennium Campaign would have us believe. It also shows that poverty is getting worse, not better, with nearly 353 million more people impoverished today than in 1981. With China taken out of the equation, that number shoots up to 852 million.

Some economists go further and advocate for an IPL of $5 or even $10 – the upper boundary suggested by the World Bank. At this standard, we see that some 5.1 billion people – nearly 80 percent of the world’s population – are living in poverty today. And the number is rising.

These more accurate parameters suggest that the story of global poverty is much worse than the spin doctored versions we are accustomed to hearing. The $1.25 threshold is absurdly low, but it remains in favour because it is the only baseline that shows any progress in the fight against poverty, and therefore justifies the present economic order. Every other line tells the opposite story. In fact, even the $1.25 line shows that, without factoring China, the poverty headcount is worsening, with 108 million people added to the ranks of the poor since 1981. All of this calls the triumphalist narrative into question.

A call for change

This is a pressing concern; the UN is currently negotiating the new Sustainable Development Goals that will replace the Millennium Campaign in 2015, and they are set to use the same dishonest poverty metrics as before. They will leverage the “poverty reduction” story to argue for business as usual: stick with the status quo and things will keep getting better. We need to demand more. If the Sustainable Development Goals are to have any real value, they need to begin with a more honest poverty line – at least $2.50 per day – and instate rules to preclude the kind of deceit that the World Bank and the Millennium Campaign have practised to date.

Eradicating poverty in this more meaningful sense will require more than just using aid to tinker around the edges of the problem. It will require changing the rules of the global economy to make it fairer for the world’s majority. Rich country governments will resist such changes with all their might. But epic problems require courageous solutions, and, with 2015 fast approaching, the moment to act is now. Read more @original source http://www.aljazeera.com/indepth/opinion/2014/08/exposing-great-poverty-reductio-201481211590729809.html

*Dr Jason Hickel lectures at the London School of Economics and serves as an adviser to /The Rules. 

Africa’s Jobless Growth: Economic success just for a few cannot be a replacement for human rights or participation, or democracy August

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Africa is Rising! At Least Its 1% Is

Africa’s economy may be booming, but this will do little to help unemployment and poverty if growth is jobless and its spoils are limited to the few.

What we need in Africa is balanced development. Economic success cannot be a replacement for human rights or participation, or democracy … it doesn’t work…it worries us a lot when we don’t see the trickle-through factor, when gain goes to the top 1% or 2%, leaving the rest behind.” – Mo Ibrahim October 15, 2012

It did not come as a surprise to many when, on October 15, the Mo Ibrahim Foundation announced that there was no winner for its annual $5 million African leadership award – for the third time since its inception in 2006. What was surprising, however, was that the foundation’s chair, British-Sudanese billionaire Mo Ibrahim, alsoadmonished the much-celebrated recent economic ‘success’ of the African continent for largely failing to translate into better human rights and social development, and for essentially creating a few elitist winners at the top whilst the rest were left struggling at the very bottom.

Recent reports, forecasts and editorials of influential financial magazines are incredibly optimisticabout Africa – its booming economic growth, its investment opportunities and its growing middle-class. Sub-Saharan African countries are reportedly among the fastest growing in the world with six out of ten world’s fastest growing economies, and recording growth rates averaging 4.9%, higher than the developing country average and much higher than the developed country average.

The Economist’s December 2011 print issue was boldly titled ‘Africa Rises’ and in August 2012, it again boldly proclaimed that ‘A Continent Goes Shopping’, underscoring the voracious purchasing power of the African middle-class to buy consumer and even luxury goods. The current received wisdom in these sleek reports, glossy magazine pages and glass-panelled conference rooms is that sub-Saharan Africa really is the place to be and to invest in, with all its abundant opportunities.

Jobless growth

This much-trumpeted economic success is mostly true, until one looks at the other side. Then questions arise over to what extent growth is spread across sectors of the economy, and whether such economic growth is translating into corresponding improvements in human and social development.

It is common knowledge that this new dawn of booming economic growth is largely the consequence of the recent rise in the global commodity prices of natural resources, chiefly oil, while the vibrancy of other sectors of the economy such as banking, telecommunications and construction trail behind in terms of growth. Many African countries primarily depend on the exportation of natural resources – and industry which is highly capital- (and technology-) intensive, providing few jobs. Only five of Africa’s fifty-four countries are currently not “either producing or looking for oil”.

It is therefore no surprise that many African countries, especially the economic powerhouses of the continent, are bedevilled by high unemployment, particularly amongst young people – hovering at25% in Egypt, 48% in South Africa and 42% in Nigeria. Thus, growth in capital-intensive sectors – such as resource exports, banking, and telecommunications – is barely trickling down to create jobs and economic opportunities for the vast majority of the people – a phenomenon commonly known as ‘jobless growth’.

Many sub-Saharan African countries experiencing record-level economic growth still have low rankings in human development indices, despite marginalimprovements in education enrolment and, with countrywide variations, maternal health. This contradiction is further reinforced by the growing inequality that characterises many of such African ‘powerhouses’. Luanda in Angola (thanks to flowing petro-dollars) and N’Djamena in Chad were, respectively, the second and eighth most expensive cities to live as an expatriate in 2012 – ahead of Sydney, London and New York according to Mercer’s Cost of Living Survey. Juba in the newly independent South Sudan is also gaining notoriety for its high cost of living, while the price of select real estate in Abuja and Lagos in Nigeria reportedly rivals that of some Western cities. These expensive cities are in countries grouped within the ‘Low Human Development’ category of the United Nation’s Human Development Indexbased on indicators such as health, income and education.

A tale of two cities

There has certainly been some improvement – for one, there is now an identifiable middle-class in Africa with money to splash around in the cinemas of Abuja and pricey hotels of Accra, the malls and retail outlets of Johannesburg and the exclusive residential estates of Lagos and Nairobi. However, once you step out of these glitzy inner cities and look to the outskirts, the glaring contrast between the shiny modernity and the urban deprivation in the slums hits you like the searing tropical sun.

 

The task thus remains for governments to devise sustainable development strategies that are tailored specifically to suit the African context. Such strategies must sustain the momentum of economic growth while ensuring that growth spreads to and strengthens sectors such as mechanised agriculture, light manufacturing and small-scale enterprises, which have a direct impact on the lives and incomes of citizens.

Such transformational policies should ensure that revenue windfalls are utilised wisely towards social and welfare policies, which will empower millions of Africans out of poverty, thereby creating a robust middle-class rather than just enriching an already existing sliver. It also means that such funds can be saved to help with later needs, as with the Sovereign Wealth Fund embarked on by countries such as Angola and the new oil-producer Ghana.

Importantly, the African youth bulge needs to be transformed into a demographic dividend by providing employment and economic opportunities to an increasingly educated African youth and by providing critically needed infrastructure so that abundant innovative ideas, which are capable of transforming lives and societies, can materialise into reality.

Ultimately, these are still governance challenges that Africa has a long way go to overcome, but the marginal improvements in some aspects of governance, especially women’s rights, as the Mo Ibrahim Foundation’s Index has shown, gives room for some cautious optimism. Mo Ibrahim’s admonishment could not have come at a better time.

Read @ it original source:http://thinkafricapress.com/development/mo-ibrahim-issues-timely-caution-afro-optimists?utm_content=buffer46624&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

 

*Zainab Usman is a Nigerian freelance writer. She is currently a DPhil candidate at the University of Oxford in Governance and Political Economy of Economic Diversification in Sub-Saharan Africa. She has a BSc in International Studies from Ahmadu Bello University Zaria and a Masters in International Political Economy and Development from the University of Birmingham. Zainab is an advocate of good governance, poverty reduction and women and youth empowerment. She regularly blogs atzainabusman.wordpress.com.

Ethiopia’s capital flight is estimated at US$24.9 billion or 83.8% of the GDP

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The term capital flight has been given many interpretations in the economic literature and in the  press, leading to confusion and misinterpretations. In the popular press, capital flight is presented as illegal or illicit financial flows. It is housed in the same domain as money laundering, tax  evasion, transfer pricing, underground trafficking. Yet, while these activities are illicit, not all of  them amount to capital flight. At the same time, while most capital flight may be deemed illicit. Capital flight may be illicit in one of three ways: when it consists of money acquired illegally and transferred  abroad; when funds are transferred abroad illicitly by violating capital account regulations; when capital is hidden abroad and therefore not being subject to taxation and other government regulations. It is not possible to make this determination a priori from the data that is used to calculate capital flight, which involves a reconciliation of recorded capital inflows (mainly external borrowing and foreign direct investment) and the use of these resources (to cover the current account deficit and accumulation of reserves). The term capital flight means capital flows from a country that are not recorded in the country’s Balance of Payments (BoP). If all the ransactions were correctly and systematically recorded, inflows would balance out with outflows, except for small and random statistical errors as recorded in the ‘net errors and omissions’ line of the BoP. Where large discrepancies are observed, in other words, where there is  substantial ‘missing money’ in the BoP, this is taken as an indication of the presence of capital  flight.

http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_351-400/WP353.pdf

Ethiopia’s capital flight is estimated at US$24.9 billion or 83.8% of the GDP

 

capital_flight

(Source: Political Economy Research Institute, the University of Massachusetts).

 

 

August 17, 2014 (PERI Research) — Ethiopia’s capital flight is estimated at about US$24.9 billion which is 83.8% of the country’s Gross Domestic Product (GDP). Ethiopia is ranked 8th in the group of 33 countries for which data are available but it stands first when compared to non-oil and/or mineral exporting countries. Even the latter was considered to be substantially lower than the actual flows give that large stock of immigrants. The true figure could be as high as one billion dollars. If so, Ethiopian capital flight would be commensurately larger than the estimated.

 

Capital losses through trade misinvoicing and unrecorded remittance
Substantial export underinvoicning (net outflows) couple with import underinvoicing (net inflows), with the balance resulting in a net outflow, as in the case of Sudan or a net inflow, as in the cases of Ethiopia and Ghana.

Unrecoreded remittances also contribute substantially to estimated capital flight in some countries. In Ethiopia, the volume of remittances reported by the World Bank in 2010 was about half the amount reported by the Central Bank ($661 million).

The following figures are in millions

capital_flight3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Source: Political Economy Research Institute, the University of Massachusetts).

http://ayyaantuu.com/horn-of-africa-news/ethiopias-capital-flight-is-estimated-at-us24-9-billion-or-83-8-of-the-gdp/

http://www.peri.umass.edu/fileadmin/pdf/ADP/SSAfrica_capitalflight_Oct23_2012.pdf

http://concernedafricascholars.org/bulletin/issue87/asiedu/