Africa is losing nearly $89bn a year in illicit financial flows such as tax evasion and theft, amounting to more than it receives in development aid, a new UN study shows.
The estimate, published on Monday in the United Nations Conference on Trade and Development’s (UNCTAD) 248-page report, is the UN’s most comprehensive to date for Africa. It shows an increasing trend over time and is higher than most previous estimates.
Nearly half of the total annual figure of $88.6bn is accounted for by the export of commodities such as gold, diamonds and platinum, the report said. For example, gold accounted for 77 percent of total under-invoiced exports worth $40bn in 2015, it showed.
Understating a commodity’s true value helps conceal trade profits abroad and deprives developing countries of foreign exchange and erodes their tax base, UNCTAD said.
The report calls Africa a “net creditor to the world”, echoing economists’ observations that the aid-reliant continent is actually a net exporter of capital because of these trends.
“Illicit financial flows rob Africa and its people of their prospects, undermining transparency and accountability and eroding trust in African institutions,” said UNCTAD Secretary-General Mukhisa Kituyi.
Junior Davis, head of policy and research at UNCTAD’s Africa division, told the Reuters news agency the figure was likely an underestimate, citing data limitations.
Tackling illicit flows is a priority for the UN, whose General Assembly adopted a resolution on this in 2018, and the report urges African countries to draw on the report to present “renewed arguments” in international forums.
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