A campaigning organisation that works for rights, equality and development across Southern Africa has estimated that the Southern African Development Community (SADC), which comprises 16 member states, lost around US$8.8 billion in trade-related illicit outflows in 2015 alone.

Action for Southern Africa (ACTSA) says this is a conservative estimate because there is no data for the Democratic Republic of Congo, only the SADC region’s trade with the ‘Global North’ is considered, and misinvoicing of trade in services is not covered.

Tax losses

The report, The Money Drain: How Trade Misinvoicing and Unjust Debt Undermine Economic and Social Rights in Southern Africa, says trade-related illicit outflows from South Africa alone amounted to at least US$5.9 billion in 2015.

The report underlines that all trade-related illicit outflows are illegal, and thus a percentage of the entire US$8.8 billion could be taxed.

Evolving methodology

The authors of the report concede that the methodology they used to estimate trade-related illicit outflows is evolving, thus making it difficult to discuss trends in relation to trade-related illicit outflows from the SADC region.

However, the report says that trade-related illicit outflows from the region are certainly not a new phenomenon, and all indications are that they will continue to be significant in size unless action is taken.

Global response required

The report concludes that progress on tackling illicit financial flows is fragmented and slow.

While SADC countries can certainly do more, overall success is heavily dependent on the Global North taking concerted action to support African efforts and drive global reforms.

The report, The Money Drain: How Trade Misinvoicing and Unjust Debt Undermine Economic and Social Rights in Southern Africa, can be found here.

Categories: Trade Based Financial crimes News