Africa: Tackling Illicit Outflows

The Global Financial Integrity (GFI) report estimates that sub-Saharan Africa loses more than twice as much in illicit financial outflows than it receives in aid. According to Kevin Watkins, executive director of the Overseas Development Institute (ODI), transfer or trade mispricing is a practice that facilitates the shifting of profits to low-tax jurisdictions. He explains this practice costs less-developed countries “in excess of $550 billion annually: more than five times annual aid flows.” The lack of transparency in the global financial system facilitates such behavior among multi- and transnational corporations. Tax havens are the favorite destinations for such illicit transfers, which otherwise could have been used to boost economic and industrial development.

According to another GFI report, a conservative estimate for overall illicit outflows from Africa, exempting all other flows in illegal activities from 1970 to 2008, total $1.8 trillion. The 2013 Africa Progress Report, citing the GFI investigation, also puts the average annual loss to Africa from 2008 to 2010 at $38 billion — higher than development aid to this region in the same timeframe. Furthermore…

For more, do read this article titled Africa: Tackling Illicit Outflows on the Fair Observer° platform filed in the Economics section.