Illicit Financial Flows from Developing Countries now around $1 trillion a year
According to a new paper from the Global Financial Integrity watchdog. The paper defines illicit financial flows as ‘the proceeds from both illicit activities such as corruption (bribery and embezzlement of national wealth), criminal activity, and the proceeds of licit business that become illicit when transported across borders in contravention of applicable laws and regulatory frameworks (most commonly in order to evade payment of taxes).’
The graph shows illicit flows more than doubling from 2002 to 2006 (the two lines correspond with least and most conservative estimates). In contrast, the paper estimates licit flows rose from $92bn to $208bn over the same period – i.e. about a fifth of the illicit flows.
Asia is the worst offender, accounting for half the illicit flows, despite only having 20% of world GDP. Sub Saharan Africa accounts for a mere 3% of the total, but then its share of GDP is only 2.3%.
Compare and contrast: the global aid figure in 2006 was $104bn – a tenth as much. What’s more, Sub Saharan Africa’s 3% share of $1 trillion comes to $30bn – a similar order of magnitude to its total aid budget. Want to increase resource flows to the region? Keep pushing on aid, but also close down the loopholes, tax havens etc that deprive African governments of the capital they need to fund schools, hospitals, clean water, infrastructure etc etc.