It is no news that corruption, fraud, and crimes thrive in almost every country around the globe. However, faith and the rich have been robbing Africa for a very long time. Though considered one of the richest places around the world in resources and culture, countries across this beautiful content suffer under the hands of greed and corruption. Thus, a thorough UN study revealed that Africa is losing nearly $89bn a year in illicit financial flows. These financial flows include but are not limited to tax evasion, theft, illegal markets, and corruption.
The world’s net creditor
On Monday, the United Nations Conference on Trade and Development (UNCTAD) released a 248-page report describing the issue. Furthermore, the report isn’t only the UN’s most comprehensive to date for Africa, but it also proved a harmful increasing trend thriving in the motherland. Africa is losing yearly a total of $89bn, if not more. Thus, Africa is losing on daily bases more than it receives in development aid.
The report called Africa a “net creditor to the world”. Thus, echoing and giving proof to economists’ theories that the aid-reliant continent is truly a net exporter of capital. “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
Moreover, Junior Davis, head of policy and research at UNCTAD’s Africa division, told the Reuters news agency that even this figure was likely an underestimate due to overall data limitations.
Illicit financial flows undermine Africa’s potential to achieve the SDGs
These illicit financial flows are draining capitals and revenues in all over Africa. Thus, they don’t only undermine Africa’s productive capacity, but they also stand in the way of achieving the Sustainable Development Goals in the content.
The truth is African countries with high IFFs usually spend 25 percent less than countries with low IFFs on health. They also undermine education by spending 58 percent less on it. Furthermore, this indirectly undermines girls’ and women’s rights since they already have less access to health and education.
Hence, the report highlights the significance of capital flight and IFFs since this directly helps Africa achieve Sustainable Development. Therefore, instead of losing the money, capital can use it to finance vital investments such as infrastructure, education, health, and productive capacity.
High-value, low-weight commodities
Moreover, the report analyzes the relationship between certain high-value, low-weight commodities. Thus, instead of increasing in certain countries, illicit financial flows increase in specific fields.
Out of the money lost because of IFFs, $40bn is derived from extractive commodities. For example, in 2015, 77 percent were concentrated in the gold supply chain, followed by diamonds with 12 percent, then platinum with 6 percent.
Such an analysis exposes the relationship between gold and IFFs. Despite their differing local conditions, countries rich with gold suffer most from these flaws.
The UN also stated that tackling the issue is one of its current priorities. Moreover, the General Assembly as well as the report urges all African countries to consider the report and present “renewed arguments” in international forums.
References:
Al Jazeera. (2020a, September 28). Tax evasion and theft ‘rob Africa’ of $89bn a year: UN study. Africa News | Al Jazeera. https://www.aljazeera.com/economy/2020/9/28/tax-evasion-theft-rob-africa-of-89-bn-per-year-un-studyAl Jazeera. (2020b, September 29). Illicit money flows from Africa near $89bn, UN study says. Africa | Al Jazeera. https://www.aljazeera.com/news/2020/9/29/illegal-money-flows-from-africa-near-90bn-un-study-saysCobblah, M. (2020, September 29). Tax evasion and theft ‘rob Africa’ of $89bn a year: UN study. MyJoyOnline.Com. https://www.myjoyonline.com/news/international/tax-evasion-and-theft-rob-africa-of-89bn-a-year-un-study/Editorial Staff. (2020, September 24). Africa could gain $89bn annually by curbing illicit financial flows, the UN says. Africa Briefing. https://africabriefing.org/2020/09/africa-could-gain-89bn-annually-by-curbing-illicit-financial-flows-un-says/c
