Africa is losing more than US$50 billion every year in illicit financial outflows as governments and multinational companies engage in fraudulent schemes aimed at avoiding tax payments to some of the world’s poorest countries, impeding development projects and denying poor people access to crucial services.
Illegal transfers from African countries have tripled since 2001, when US$20 billion was siphoned off, according to a report released by the African Union’s (AU) High Level Panel on Illicit Financial Flows and the UN Economic Commission for Africa (UNECA).
The report was praised by civil groups as the first African initiative to address illicit outflows from the continent.
In total, the continent lost about US$850 billion between 1970 and 2008, the report said. An estimated US$217.7 billion was illegally transferred out of Nigeria over that period, while Egypt lost US$105.2 billion and South Africa more than US$81.8 billion.
Trade mispricing, payments between parent companies and their subsidiaries and mechanisms designed to hide revenues are all common practices by companies hoping to maximize profits, the study said.
Nigeria’s crude oil exports, mineral production in the Democratic Republic of the Congo and South Africa, and timber sales from Liberia and Mozambique are all sectors where trade mispricing occurs.
“The information available to us has convinced our panel that large commercial corporations are by far the biggest culprits of illicit outflows, followed by organized crime. We are also convinced that corrupt practices in Africa are facilitating these outflows, apart from and in addition to the related problem of weak governance capacity,” said former South African president Thabo Mbeki, who chairs the panel.
Criminal networks engaged in drugs and human trafficking, animal poaching, and theft of oil and minerals also contributed to money leaving the continent.
Reducing these losses requires urgent and coordinated action, the report said, calling for renewed political interest in fighting corruption, increased transparency in extractive sector transactions and a crackdown on banks that aid fraudulent transfers.
African and non-African governments and the private sector — including oil, mining, banking, legal and accountancy firms — were all involved in schemes designed to launder money and avoid paying corporate tax, the study said.
More than US$1 trillion was siphoned off globally through illegal schemes from 2007 to 2009, the report said, adding that lost African revenues comprised 6 percent of that total. However, the authors cautioned that poor data and complicated laundering networks could make the amount much higher.
“Illicit financial flows from Africa range from at least US$30 billion to US$60 billion a year,” the report said. “These lower-end figures indicated to us that in reality Africa is a net creditor to the world rather than a net debtor, as is often assumed.”
“Oxfam estimates that Africa alone is losing almost half of the global US$100 billion of annual illicit financial flows,” Oxfam executive director for South Africa Sipho Mthathi said.
DITCH TACTICS: Kenyan officers were on their way to rescue Haitian police stuck in a ditch suspected to have been deliberately dug by Haitian gang members A Kenyan policeman deployed in Haiti has gone missing after violent gangs attacked a group of officers on a rescue mission, a UN-backed multinational security mission said in a statement yesterday. The Kenyan officers on Tuesday were on their way to rescue Haitian police stuck in a ditch “suspected to have been deliberately dug by gangs,” the statement said, adding that “specialized teams have been deployed” to search for the missing officer. Local media outlets in Haiti reported that the officer had been killed and videos of a lifeless man clothed in Kenyan uniform were shared on social media. Gang violence has left
US Vice President J.D. Vance on Friday accused Denmark of not having done enough to protect Greenland, when he visited the strategically placed and resource-rich Danish territory coveted by US President Donald Trump. Vance made his comment during a trip to the Pituffik Space Base in northwestern Greenland, a visit viewed by Copenhagen and Nuuk as a provocation. “Our message to Denmark is very simple: You have not done a good job by the people of Greenland,” Vance told a news conference. “You have under-invested in the people of Greenland, and you have under-invested in the security architecture of this
A fire caused by a burst gas pipe yesterday spread to several homes and sent a fireball soaring into the sky outside Malaysia’s largest city, injuring more than 100 people. The towering inferno near a gas station in Putra Heights outside Kuala Lumpur was visible for kilometers and lasted for several hours. It happened during a public holiday as Muslims, who are the majority in Malaysia, celebrate the second day of Eid al-Fitr. National oil company Petronas said the fire started at one of its gas pipelines at 8:10am and the affected pipeline was later isolated. Disaster management officials said shutting the
Japan unveiled a plan on Thursday to evacuate around 120,000 residents and tourists from its southern islets near Taiwan within six days in the event of an “emergency”. The plan was put together as “the security situation surrounding our nation grows severe” and with an “emergency” in mind, the government’s crisis management office said. Exactly what that emergency might be was left unspecified in the plan but it envisages the evacuation of around 120,000 people in five Japanese islets close to Taiwan. China claims Taiwan as part of its territory and has stepped up military pressure in recent years, including