In the wake of the recent “Paradise papers” scandal, coming just 18 months after the “Panama papers” shake, we can no longer postpone the question about who is going to bear the highest cost of the diversion of global public resources from overall development to private gains.
Sub-Saharan Africa youth know the answer.
Over two thirds of Africa’s population is under the age of 35 , making Africa the most “youthful” continent in the world. With corruption being one of the top-causes for the “missed” development of the continent over the past 40 years, young people are bearing its highest costs.
Illicit financial flows cost Africa from at least $30bn to $60bn every year, according to this report. Considering that African countries are spending on average 5% of total GDP of about $1.5 trillion on public education every year, this would mean that corruption is subtracting more than half of the resources that could finance education for the whole continent every year.
If we account for the fact that a one-year increase in average tertiary education levels would raise annual GDP growth in Africa by 0.39 percentage points, and eventually yield up to a 12% increase in GDP, the opportunity-cost of corruption on African youth development is unbearably high. For them this means lost job opportunities, marginal access to basic services, and often disillusionment and hopelessness. These mutual-reinforcing conditions are in turn fueling instability.
Corruption also holds back the innovation potential of young people, often acting as a tax on innovation. First, by increasing the costs borne by innovators, due to the bribery they too often have to pay. It is estimated that approximately 20% of firms around the world are expected to give gifts to public officials "to get things done", with Sub-Saharan African firms attaining the highest score of 27%. Secondly, by producing distortion effects on the allocation of entrepreneurial talents. Studies show that corruption acts on the incentive structure of a country, determining whether entrepreneurial talents are more attracted to productive activities such as innovation, or on the contrary, to unproductive or destructive activities such as rent seeking and crime, ultimately depressing human capital formation for innovation and growth.
Accounting for the cost of corruption on the development of youth and of their talents, therefore means creating and fostering a culture of ethics and integrity where youth feel they can contribute and access the development of their country.
Creating more inclusive societies and giving youth voice in the political arena, by making the Youth Councils informative and independent bodies is just as important as closing the skills mismatch they face in the work environment. Ensuring transparency and access to information for the youth to develop their business and creating a conducive policy and regulatory framework are some of the macro interventions needed to empower youth as “agents of change” in Africa.
The path for change is not just creating more economic opportunities for the youth in Africa, but addressing the structural barriers that are emptying their basket of opportunities.