The United Nations Conference on Trade and Development (UNCTAD) has published an extensive study into illicit financial flows (IFFs) out of Africa that it estimates to amount to around US$89 billion annually.
The report argues that IFFs are a shared responsibility between developed and developing countries and need to be tackled as a significant impediment to the economic development of Africa.
The report, Tackling Illicit Financial Flows for Sustainable Development in Africa, found that IFFs linked to the export of primary extractive resources were estimated as being as high as US$40 billion in 2015 and over the past decade have amounted to US$278 billion. The report says this is a conservative estimate and should be taken as a lower bound.
Extractive export underinvoicing in Africa is, on average, equivalent to 16 per cent of merchandise exports of the commodities covered in the report, which is the latest in UNCTAD’s annual Economic Development in Africa series.
Precious metals underinvoiced
At 77 per cent, gold is the largest contributor in total African extractive export underinvoicing.
Other precious metals, such as platinum (6 per cent) and diamonds (12 per cent), are also persistent positive contributors.
Curbing IFFs is an avenue for improved prospects for environmental, social and economic development in Africa according to the report.
It also found that the impact of IFFs on environmental sustainability has hardly been assessed in the literature, even though environmental damage in the extractives sector is a major concern.
Countries with high IFFs may be more vulnerable to climate change and appear to have the lowest ability to leverage investments for health, education and climate change mitigation the report concludes.
The UNCTAD report, Tackling Illicit Financial Flows for Sustainable Development in Africa, can be found here.
Categories: Trade Based Financial crimes News