26 February 2012

Africa: Illegal Money Transfers Hurting Continent's Growth

Experts say that the increasing trends of illicit financial flows are posing a great threat to Africa's fragile growth as they pump back more dollars to developed countries than those sent to poor African states.

Alezar Dessie, a consultant with the United Nations Economic Commission for Africa (ECA), notes that out of every dollar channelled to poor countries, as much as ten dollars may have left going back to rich countries, a back flow that leaves Africa begging.

"Illicit financial outflow is not only morally repugnant, but also carries a heavy economic, political and social cost with it," he said, while presenting a paper on 'Illicit Financial Outflows: A development challenge for Africa.'

The paper was presented on Friday at an Experts' Meeting on Illicit Financial Outflows, organized by ECA's Governance and Public Administration Division (GPAD), in collaboration with the African Union Advisory Board on Corruption (AUABC) in Kigali.

Dessie added that Billions of dollars illicitly leave the African continent on a regular basis as poor countries generate the flows while the developed world

facilitates their absorption which is detrimental to financial and development in least developed countries.

Illicit Financial outflows include secret financial deals, bribery, tax avoidance and evasion and illegal commercial activities (illegal drugs, illegal weapon sales, trafficking of women and children...), among others.

According to a study by Global Financial Integrity (GFI), it is estimated that a total of US $850 billion to US $1 trillion were illegally moved from developing countries to the developed world in 2006. This skyrocketed further to US $1.3 trillion in 2008, barely two years after, setting yet off another alarm on the increasing illicit outflows.

Aurelien Agbenonci, the UN Rwanda Resident Coordinator/UNDP Resident Representative, is optimistic that ECA's initiative to focus on the ravages of illicit financial outflows is a step in the right direction.

"We should all support and encourage partnerships and synergies that seek to free Africa from the scourge of corruption and reversion of the growing trend towards siphoning the continent's resources outside its borders," he said

Experts also reveal that such unchecked outflow could easily wipe out the continent's external debt of about $250 billion and still leave $600 billion for economic development.

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