A new United Nations report has revealed that Africa is losing about $89 billion every year in illicit financial flows involving tax evasion and theft.
The figure is more than what the continent receives in development aid.
The report released by the United Nations Conference on Trade and Development (UNCTAD) illustrates that the trend has been increasing over time, and the $89 billion figure is higher than what analysts had previously estimated.
Surprisingly, the report calls the continent, a “net creditor to the world”, in line with common experts’ perceptions that the Africa is actually a net exporter of capital due to the illicit financial flows trends.
UNCTAD Secretary General Mukhisa Kituyi said, “Illicit financial flows robs Africa and its people of their prospects, undermining transparency and accountability and eroding trust in African institutions.”
Mary Samido from the African Institute of Finance believes that UNCTAD underestimated the true figures due to data limitations.
More than half of the total annual figure of $88.6 billion is accounted for by the export of minerals like gold, diamonds, and platinum. In 2015, gold accounted for 77 percent of total under invoiced exports worth $40 billion, according to the report.
The effect of understating a commodity’s true values is it deprives developing countries of foreign exchanges, and erodes their tax base. Meanwhile, those participating in the illicit financial flows are able to hide their trade profits abroad.
Tackling illicit financial flows is one of the top priorities for the United Nations. The General Assembly adopted a resolution in 2018, and UNCTAD urges African nations to draw on the report in order to re-emphasize the vitality of tackling illicit financing in international forums.