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World

Africa losing $89 billion each year due to illicit financial flows, according to UNCTAD report

  • In a recent from the United Nations Conference on Trade and Development (UNCTAD), it can be observed that Africa has lost nearly $89 billion on an annual basis, in illicit financial flows - which include tax evasion, theft, and diversion of public funds.
06 Oct 2020

In a recent study from the United Nations Conference on Trade and Development (UNCTAD), it can be observed that Africa has lost nearly $89 billion on an annual basis, in illicit financial flows - which include tax evasion, theft, and diversion of public funds - adding that this figure amounts to more than what the continent receives in international development aid.

The report highlights that this consistently increasing trend in aid-reliant economies has made Africa the “net creditor to the world”, and has forced the continent to act as an exporter of essential capital, due to the artificially aid-induced nature of their domestic economies.

Nearly half of the annual figure of $89 billion accounted for the illicit export of commodities including gold, diamonds, and platinum - all of which have been extracted from the continent through the use of militias, and elaborate smuggling networks. For instance, the report highlighted that gold accounted for 77 percent of the total under-invoiced exports amounting to $40 billion in 2015.

More importantly, understating the true value of any commodity helps to conceal illicit trading profits abroad, especially in offshore accounts in international tax havens such as Panama, depriving these fragile economies of essential foreign exchange, and eroding their limited tax base. The theme of this year’s United Nations General Assembly session dealt with the consequences of money laundering and illicit financial activity from developing countries, and the impact it can have on the sustainability of these emerging economies - and as highlighted in this report, the international community has a long way to go in tackling these systemic issues.