African Economic Outlook 2010 Special theme: Public Resource Mobilisation and Aid

This year?s edition of the AEO finds Africa?s economies weakened by the global recession and at the same time under pressure to make additional efforts to achieve the Millennium Development Goals. The world economic crisis brought a period of high growth in Africa to a sudden end. Average economic growth was slashed from an average of about 6% in 2006-2008 to 2.5% in 2009 with per capita GDP growth coming to a near standstill. The global crisis of 2009 had its strongest effect on southern Africa, where growth was slashed (from the average over the preceding three years) by almost 8 percentage points to negative growth of around 1%.

While Africa is on a path to recovery, buoyed by the strengthening of global trade and the rebound of commodity prices, there is a risk that growth remains too low to significantly reduce unemployment and poverty. It is against this backdrop that the 2010 AEO explores how public resources can be better mobilised for development through more effective, efficient and fairer taxation. This issue is particularly important given the uncertainties about future export revenues and unstable and unpredictable inflows of Foreign Direct Investment and Official Development Aid. The study includes an analysis of practices that erode the existing tax base such as the excessive granting of tax preferences, insufficient taxation of extractive industries and an inability to fight abuses of transfer pricing by multinational enterprises.