The world’s leading industrialised nations, while falling behind in efforts to meet existing promises on increases in aid are also failing to plug financial leaks from African countries, Christian Aid, the UK development agency has said in the light of the recent G8 summit.
"Even if they manage to double aid to Africa by 2010, which at the moment seems unlikely, the African Union said that around $150 billion leaves the continent in illicit money flows each year," said Andrew Pendleton, Christian Aid spokesperson.
He explained: "Only a fraction of this is due to corruption, the rest is as a result of a global financial systems that lacks transparency and allows companies and individuals to shift their tax liability offshore."
Christian Aid has been calling on G8 leaders to support a new international financial reporting standard that would oblige multinational companies to be more transparent in their dealings across borders and for greater co-operation between tax authorities to share information on tax avoidance.
"Africa’s development and its people’s health and wellbeing can only be improved long term if countries can generate and hold onto more of their own money," said Mr Pendleton.
"This means the G8 has to have a new relationship with Africa based on supporting countries to develop strong, transparent investment regimes of their own rather than administering the usual prescriptions which favour investors from the rich world over the needs of African people," he added.
Christian Aid believes that investment in Africa can be an important driving force for development, but that countries ought to be free to set their own investment policies and not locked into low tax rates and liberal remittances laws through bilateral and regional trade agreements.