Africa Loses Billions Annually to Illicit Financial Flows. City, Country — Lusaka, Zambia — Africa is hemorrhaging billions of dollars annually due to Illicit Financial Flows (IFFs), according to recent reports and analyses.
The outflow of capital is a significant barrier to the continent’s development and economic sovereignty.
An estimated US$60 billion in investable capital is spirited out of Africa annually, primarily due to IFFs, which have surged to an annual figure of US$100 billion. This financial drain is attributed to a combination of factors, including tax evasion, trade mis-invoicing, and the activities of multinational corporations (MNCs).
The Thabo Mbeki — chaired AU/ECA High Level Panel on IFFs highlighted the role of non-African private and public actors in facilitating these outflows.
Commercial activities by the private sector are the largest contributor to IFFs, followed by organized crime and public sector activities, with corrupt practices playing a pivotal role.
In Uganda, for instance, the Economic Policy Research Centre (EPRC) estimates that the country loses roughly UGX 2 trillion per year, or about US$500 million to US$550 million, to IFFs. This amount is equivalent to roughly 10% of the country’s national budget.
The Global Financial Integrity (GFI) reported that in 2022, Sub-Saharan Africa experienced total value gaps in trade transactions amounting to an estimated $152. 9 billion. South Africa was the hardest hit, with cumulative value gaps totaling $478.
0 billion over a 10-year period. Efforts to curtail IFFs and enhance global development and security are ongoing.
The international community is called upon to address issues such as money — laundering, tax evasion, and international bribery.
Further details and policy solutions are expected to emerge as the situation develops.
*Additional reporting by ImNews | Sources consulted: 5*
