Illicit Financial Flows from Africa


The billions that got away: Stop the Bleeding – Campaign to End Illicit Financial Flows from Africa

Africa: The billions that got away.  eBook. TrustAfrica / Mail & Guardian Africa. June 2015

TrustAfrica is supporting African civil society organisations in launching a popular campaign to end illicit financial from Africa. Dubbed “Stop the Bleeding – Campaign to End Illicit Financial Flows from Africa”, this is envisaged as a campaign rooted in African experiences, driven by African agency and reinforced by global Africa solidarity linkages. The campaign broadens the conversation on illicit financial flows beyond specialist circles and seeks to mobilise ordinary people and key constituencies such as students and youth, trade unions and grassroots social movements to be a key part of the voices for change.

The much awaited Report of the High Level Panel (HLP) on Illicit Financial Flows from Africa was finally presented at the 24th AU Summit in Addis Ababa and adopted by African leaders. The findings from the former South African president Thabo Mbeki led HLP echoes civil society voices from across the continent in highlighting illicit financial flows as a serious threat to inclusive development in Africa and calling for urgent practical policy action to stop the hemorrhage. One of the most notable findings of the HLP process is that illicit outflows from Africa are large and increasing at an alarming rate of 20.2% per year (according to Global Financial Integrity (GFI) calculations for the period 2002 – 2011). …

Illicit Financial Flows – Report of the High Level Panel on Illicit Financial Flows from Africa. February 2015. African Union Commission/United Nations Economic Commission for Africa (AUC/ECA) Conference of African Ministers of Finance, Planning and Economic Development.

From the report’s Foreword (by Thabo Mbeki, Panel Chairperson):

…Despite the challenges of information gathering about illicit activities, the information available to us has convinced our Panel that large commercial corporations are by far the biggest culprits of illicit outflows, followed by organized crime. We are also convinced that corrupt practices in Africa are facilitating these outflows, apart from and in addition to the related problem of weak governance capacity.

All this should be understood within the context of large corporations having the means to retain the best available professional legal, accountancy, banking and other expertise to help them perpetuate their aggressive and illegal activities. Similarly, organized criminal organizations, especially international drug dealers, have the funds to corrupt many players, including and especially in governments, and even to “capture” weak states.

All these factors underline that the critical ingredient in the struggle to end illicit financial flows is the political will of governments, not only technical capacity.

Further, illicit financial outflows whose source is Africa end up somewhere in the rest of the world. Countries that are destinations for these outflows also have a role in preventing them and in helping Africa to repatriate illicit funds and prosecute perpetrators. Thus, even though these financial outflows present themselves to us Africans as our problem, united global action is necessary to end them. Such united global action requires that agreement be reached on the steps to be taken to expedite the repatriation of the illicitly exported capital. This must include ensuring that the financial institutions that receive this capital do not benefit by being allowed to continue to house it during periods when it might be frozen, pending the completion of the agreed due processes prior to repatriation.

It also means that concrete steps should be taken to give general universal application to such best practices as might have developed anywhere in the world. This includes the relevant actions and initiatives that have been taken by such institutions as the OECD, the G8 and G20, the European Parliament and the African Tax Administration Forum….……………………………………………………………………………………………………………………………

G7 Whiffs on Illicit Financial Flows as FfD Conference Approaches. Clark Gascoigne & Sophie Haggerty. June 10, 2015 [Related: Despite Cameron’s Efforts, G7 Fails to Make Progress on Illicit Financial Flows]

The outlook was promising. In the outrage over the unfolding FIFA corruption scandal, UK Prime Minister David Cameron vowed Saturday to put corruption on the agenda of this week’s G7 Summit in Germany….Despite [Mr. Cameron’s] passionate plea [in an op-ed in The Huffington Post], world leaders failed to advance efforts to curtail illicit financial flows (IFFs) at the conclusion of their meetings.

Johannesburg Conference Links Human Rights and Financial Transparency in Africa. May 18, 2015. Illicit Financial Flows “Greatly Aggravate Poverty and Oppression in Many Developing Countries”. GFI Estimates Illicit Outflows Drain 5.5% of GDP from Sub-Saharan Africa Annually.……………………………………………………………………………………………………………………………

Illicit Financial Flows and Development Indices: 2008–2012. Global Financial Integrity. June 2015 [Press release: New Study: Illicit Outflows Correlate to Higher Poverty and Inequality, Lower Human Development]

This June 2015 report highlights the outsized impact that illicit financial flows have on the world’s poorest economies.  The study looks at illicit financial flows from some of the world’s poorest nations and compares those values to some traditional indicators of development—including GDP, total trade, foreign direct investment, public expenditures on education and health services, and total tax revenue, among others—over the period 2008–2012. The report also produces several scatter plots in which illicit flows values for all developing and emerging market nations are compared to key trade indicators and various development indices, such as human development, inequality, and poverty, to determine if correlations exist between the two.

Global Illicit Financial Flows Report: 2014. Illicit Financial Flows from the Developing World: 2003-2012. Global Financial Integrity. December 2014. This report finds that the developing world lost US$6.6 trillion in illicit financial flows from 2003-2012, with illicit outflows alarmingly increasing at an average rate 9.4 percent per year.

Global Illicit Financial Flows Report: 2013. Global Financial Integrity. December 2013

Illicit Financial Flows and the Problem of Net Resource Transfers from Africa: 1980-2009. Joint Report from Global Financial Integrity and the African Development Bank. May 2013

This report finds that, from 1980 to 2009, developing African countries lost up to $1.4 trillion in net resource transfers, which are comprised of both licit and illicit flows, including investment, remittances, debt relief, and illicit financial flows. The implications of this report are broad. Despite foreign aid, natural resource exports, and other transfers, developed countries still take away more resources than they give to Africa.

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