Illicit financial flows threaten Africa’s development – report

A drawing of the African continent on a keychain. The bulk of approximately $1.5 trillion from foreign direct investments in Africa is illicitly transferred back to developed countries. Photo by: Sarah Jones / CC BY-SA

The bulk of approximately $1.5 trillion generated annually through foreign direct investments in Africa is illicitly transferred back to developed countries, a new report claims.

Foreign direct investments in Africa have generated some $1.5 trillion every year since the early 1960s but most of it is “directed back to the developed world” in a practice that “perpetuates Africa’s economic dependence on other regions,” says the report prepared for the African Union’s High-Level Panel on Illicit Financial Flows from Africa.

The report further notes that the annual average amount of money lost to illicit financial flows has increased in past years, from an average $9 billion between 1970 and 1999 to an average $50 billion per year between 2000 and 2008.

“Ultimately, Illicit financial flows worsens the socio-economic fabric of poor communities and leads to shorter life expectancy due to limited spending in providing social services such as health care, the loss of US$ 10 for every US$ 1 received in aid is both economically and financially detrimental to the continent,” the report says, according to the U.N. Economic Commission for Africa

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About the author

  • Ivy Mungcal

    As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.