“Sub-Saharan Africa will fail to halve absolute poverty by 2015 unless it opens its economy to foreign investment and reduces its dependence on high commodity prices, the UN said Wednesday. In its annual [Economic Development in Africa] report on the continent's economy, the UN Conference on Trade and Development (UNCTAD) also said African countries must find a larger share of needed investment domestically in order to protect their economies against financial shocks.

The report - entitled Reclaiming Policy Space - said Sub-Saharan states should ‘reclaim’ their developmental role by diversifying foreign direct investment. …” [Dow Jones/Factiva] AFP writes that “…UNCTAD said Africa should make greater use of its resources by bringing the large ‘informal’ sector worth an estimated 45 percent of GDP into the economic mainstream. …

The report warned that capital flight was also sapping domestic resources. About $400 billion in capital has flowed out of Africa since the 1970s, while its debt burden is about $215 billion, said Samuel Gayi, an UNCTAD economist. …Governments should also consider a temporary amnesty to allow capital to be repatriated and create investment opportunities that would attract money from Africans living abroad, it added. Tax revenues in Africa account for just 16 percent of GDP, half the portion harnessed in developed nations, UNCTAD said.

To mobilize hidden domestic resources, it suggested better tax collection which could double revenues from direct taxes in some countries, public finance reforms and better use of remittances from African workers abroad. …” [Agence France Presse/Factiva]. Xinhua notes that “…The report said if capital flight is controlled, there could be sufficient funds to be used for domestic investment to help create jobs and provide a boost to incomes of large segments of the population that are unemployed or underemployed.

The issue is further compounded by the limited effect government revenue is getting from the introduction of broad based taxes, most of which are consumption taxes like Value Added Tax. … Facts suggest that there are potential sources of domestic finance that could, if properly mobilized and efficiently invested, over time reduce significantly African aid dependence by providing alternative development resources, the report claimed. …”