Illicit financial flows are costing Africa 3.7% of its Gross Domestic Product (GDP), according to a report by the United Nations Economic Commission for Africa (ECA-UN), based in Addis Ababa.
The report estimates that Africa loses approximately $88.6 billion annually due to illicit financial flows, which far exceeds the financial inflows that Africa receives each year in the form of bilateral net official development assistance from the Development Assistance Committee member countries, estimated at a total of $34 billion. The lost funds also exceed the assistance received from foreign direct investments, estimated at $54 billion.
These figures are mentioned in a ministerial declaration following the 56th session of the ECA-UN, which was recently published. The declaration clearly states that illicit financial flows pose a development problem at the continental level by diverting significant national resources and strategic investments needed for climate and development priorities.
Coupled with corruption, these flows cause a hemorrhage of foreign exchange, hinder trade and macroeconomic stability, exacerbate poverty and inequality, compromise the application of principles of accountability and transparency, and erode confidence in African institutions, the ECA-UN highlights.
Another key indicator revealed, which is just as telling as the others: combating illicit financial flows in Africa could alone reduce the financing gap for the Sustainable Development Goals by 33%.
