Wednesday, May 29, 2013

The invisible trade

Africa lost up to $1.4tn in illicit financial flows in 1980-2009, far exceeding money coming in over the same period. The joint report from the African Development Bank (AfDB) and Global Financial Integrity (GFI), a US research organisation, says the continent has been a long-term net creditor to the rest of the world. "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. Our report turns that logic upside down – Africa has been a net creditor to the rest of the world for decades," said Raymond Baker, president of GFI.

The resource drain from Africa over the last 30 years is almost equivalent to Africa's current GDP

Illicit financial flows involve the transfer of money earned through corruption, bribes, tax evasion, criminal activities and transactions involving contraband goods. Even the estimates of illicit financial flows – large as they are – are likely to understate the problem as they do not capture money lost through drug trafficking and smuggling. The natural resource sector is usually the main source of illicit financial flows

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