Capital Flight : Hidden Funds Hindering Development in Sub-Saharan Africa by Hendrix Nkamicaniye
Illicit financial outflows from sub-Saharan Africa is the least among other regions of the globe. However, it has outsized impact on Africa than elsewhere. in 1992, capital flight from Africa was lower than in Latin America, but the consequence of this leakage(on gdp) was higher: 61 percent for sub-Saharan Africa compared to 22 percent for Latin America. In 2011, illicit financial flows from Africa constitutes 7.7 percent of all the global financial flows but it has greater negative effects on less wealthy Africans regarding to gdp than in developing Europe and north Africa(mena).
Sad to say, some of illicit flows came to Africa as an official aid or external borrowing , and returned as private assets of African elites to the donors. In most cases, corruption facilitates the acquisition and transfer of those assets as well as the global financial system through tax havens. in 2008, economists Leonce Ndikumana and James Boyce argued that from 1977 to 2004 an estimate amount of 420 billion dollars was siphoned off Africa. Among the top exporters include Nigeria and Angola. As a result, in 2009 only in Nigeria, 64,4 percent of Nigerians lived below the poverty line.
In 2010, between 859 billion to 1,138 billion of dollars bled out of Africa, in the same year, the development assistance of OECD countries for developing countries were 129 billion of dollars, equal 11 or 15 percent of capital that fled from Africa. This huge amount of money would have helped African nations to give clean water, reduce mortality rate, develop the education sector and help in climate mitigation, moreover, this ill-gotten gains could have significantly reduced unemployment in sub-Saharan Africa where unemployment is expected to reach 29 million in 2017 according to the latest world unemployment social outlook trends reports of international labour organization.
Sadly,this African domestic leakage retarded growth, fuels inequality and impedes free market on African continent. it claimed that if capital flight from Africa were invested in Africa, it would have helped to meet the millennium development goal of cutting poverty by half in 2015. in fact, Africa gives than it receives. At global level, the existence of bank secrecy laws and jurisdictions made it easy to move dirty money from Africa. Unfortunately, some of the tax havens are in OECD countries which would be considered onshore. at national level, the poor governance, the existence of high presence of foreign banks, the fragile banking regulations help to hide abroad the stolen capital.
At a recent London anti-corruption summit, some African states such as Nigeria, Ghana and South Africa made commitments to implement anti-laundry money regulations which is a good start. African leaders need to keep their anti-corruption pledges they often announce during their political campaign by repatriating the stolen assets, but a lack of incentive of African elites to do so and prosecute those who engage in this crime is relatively high. In addition, the opacity and great mobility within tax havens make it difficult to trace those illicit proceeds. It is time that African citizens demand greater accountability to African leaders towards a fair distribution of wealth and developed lands which condemn capital flight but condone tax havens, to alleviate poverty in Africa by not being a stumbling block in returning the stolen public funds.