A new report released by the United Nations Conference on Trade and Development (UNCTAD) claims Africa is losing nearly $89 billion every year in illicit financial flows such as tax evasion and theft, amounting to more than it receives in development aid, reported Reuters.
“Illicit financial flows rob Africa and its people of their prospects, undermining transparency and accountability and eroding trust in African institutions”, said UNCTAD Secretary-General Mukhisa Kituyi.
According to the report entitled “Tackling illicit financial flows for sustainable development in Africa,” the main sources of financial outflows include illicit capital flight, tax and commercial practices like inappropriate invoicing of trade shipments as well as criminal activities such as illegal markets, corruption or theft.
The 248-page report found that the total illicit capital flight from African countries from 2000 to 2015 amounted to around $836 billion as compared to total external debt stock of $770 billion in 2018.It called Africa a “net creditor to the world,” in line with economists’ observations that the continent is actually a net exporter of capital because of these trends.
The report said that nearly half of the total annual figure of $88.6 billion is accounted for by the export of commodities such as gold, diamonds and platinum. It pointed out that gold accounted for around 77 percent of total underinvoiced exports worth $40 billion in 2015.
The UNCTAD report said understating the true value of any commodity helps conceal trade profits abroad and deprives developing countries of foreign exchange and erodes their tax base.
The report aims to impart African governments with knowledge on how to identify and evaluate risks associated with illicit financial flows as well as solutions to curb such outflows and use the proceeds for the achievement of national priorities. It calls for global efforts to promote international cooperation to combat illegal financial flows in Africa as well as other countries.
