IT COMES AS NO SURPRISE THAT LARGE SUMS OF money illicitly leave the African continent each year, but the scale of this movement, as revealed in a new report by the UN Economic Commission for Africa, is shocking.
The report, compiled by a high-level panel probing the illicit financial flows from Africa and chaired by Thabo Mbeki, the former President of South Africa, says that illicit transfer of funds from the developing world to the developed countries could amount to a staggering $1.5 trillion every year.
The panel points an accusing finger at the global multinationals that use a variety of means to siphon off vast amounts that the developing world, including Africa, desperately needs.
It terms this horrendous practice as 'economic sabotage' and adds that these illegal transfers undermine trade and deal lethal blows to the socio-economic fabric of poor communities in Africa.
This wholesale vacuuming of Africa's resources extracts a terrible toll on life expectancy, women and child mortality and social development by taking away resources that could otherwise have been spent on vital social services such as health care.
According to the report, Africa has lost an estimated $854bn over a 39-year period from 1970-2008. This works out at an average of $22bn per annum--an amount that could have easily made a huge difference in the lives of the continent's poorer communities.
In fact, and despite all the pious statements about social responsibility made by multinationals, the panel says the trend is getting worse. Between 2000 and 2008, the average illicit flows amounted to $50bn per year, which is also the estimate for the current year.
The report says that "just one third of the loss associated with illicit financial flows would have been enough to fully cover the continent's external debt which reached $279bn in 2008", and that for every $1 received in aid, $10 is lost in illicit transfers.
According to Global Financial Integrity, illicit financial flows refer to money that is illegally earned, transferred or utilised. This is different from capital flight, which encompasses both licit and illicit cross-border transfer of funds.
Who are the main culprits involved in this massive drain of Africa's resources? The report says that two African regions--West Africa and Central Africa--are responsible a large chunk of illicit flows from Africa of about 49%, while North Africa follows with 18%; the other parts of the continent--East and...