Wednesday, May 29, 2013

New report: Illicit Financial Flows from Africa, 1980-2009

From Inter Press Service:
"Over the past three decades, Africa has functioned as a “net creditor” to the rest of the world, the result of a cumulative outflow of nearly a trillion and a half dollars from the continent. (hat tip: @zittokabwe)
The new data comes from a report released jointly today by the African Development Bank (AfDB) and Global Financial Integrity, entitled Illicit Financial Flows and the Problem of Net Resource Transfers from Africa: 1980-2009. It complements TJN's research published last year estimating that there is $21-32 trillion sitting offshore, effectively out of the reach of tax authorities.

The traditional thinking has always been that the West is pouring money into Africa through foreign aid and other private sector flows, without receiving much in return. This report confirms what we have noted many times in the past -- particularly in the context of the excellent book Africa's Odious Debts – that Africa has been a net creditor to the rest of the world for decades. The trouble is, of course, that Africa’s foreign assets remain hidden in secrecy jurisdictions and in the hands of tiny and wealthy African élites, while its foreign debts are public, shouldered by the broad population of  Africa through their governments.

Unsurprisingly, perhaps, the report reveals that the largest losers of net resource transfers are all resource-rich countries: the top five exporters of net resources are Nigeria, Libya, South Africa, Algeria and Angola. From the press release:
"The reportfinds that Africa suffered between US$597 billion and US$1.4 trillion in net outflows between 1980 and 2009 after adjusting net recorded transfers for illicit financial outflows.

“The resource drain from Africa over the last 30 years—almost equivalent to Africa’s current GDP—is holding back Africa’s lift-off,” said Prof. Mthuli Ncube, Chief Economist and Vice-President of the African Development Bank."
The report itself adds:
"Illicit financial flows are a global problem and will require concerted efforts from the international community and the involvement of individual African countries. Many international institutions—the African Development Bank, G20, UN, European Union Commission, African Union Commission, World Bank, International Monetary Fund, and Bank for International Settlements—have underlined the importance of a determined and collective approach to resolving the challenges posed by the global shadow economy, comprising tax havens, secrecy jurisdictions, disguised corporations, trade mispricing, and money laundering. The chances of success will increase markedly if African governments themselves take domestic measures to address corruption, strengthen their anti- money laundering efforts, and also improve their investment codes. None of these is technically difficult, but they all require political will for success."
We would agree with all of that.

One more for our page entitled "Estimating the Price of Offshore."


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