Nigeria has lost $250 billion in dirty money – AfDB
Nigeria, South Africa and Egypt top the list of African countries that have hemorrhaged billions of dollars gained from corruption, kickbacks, tax evasion and other illicit activities since 1980, according to a Reuters report citing a new study shows.
Africa has lost at least $1.2 to 1.4 trillion in illicit financial flows – commonly called dirty money for its shady origins – between 1980 and 2009, according to the report from the African Development Bank (AfDB) and the advocacy group Global Financial Integrity. In the decade up through 2009, $30.4 billion a year was leaving Africa, it said.
These sums dwarf by a factor of three the amount of development aid that governments have pumped into the continent over 30 years. In fact, so much money flows out that Africa is a net creditor to the rest of the world, even though many of its citizens remain desperately poor, the report said.
“The traditional thinking has always been that the West is pouring money into Africa through foreign aid and other private sector flows, without receiving much in return. Our report turns that logic upside down,” said Raymond Baker, president of Global Financial Integrity.
The study recommends policies to crack down on money laundering, disclose the owners of shell companies, share tax information and require extractive industries to report their payments to government as ways to limit the transfer of money illegally around the world.
These measures already are on the agenda for leaders from the G20 largest developed and emerging economies, and if adopted by both African countries and those that receive the dirty money, the policies should help accelerate the continent’s development, it said.
“Curtailing illicit financial flows from African countries through improvements in governance and the business climate can improve the productivity of both domestic and foreign capital needed to boost economic growth,” the report said.
AFRICA FINANCE ITS DEVELOPMENT
Cutbacks in official development aid from rich OECD countries, which has declined from 0.5 percent of government revenues in 1980 to less than 0.2 percent today, make boosting domestic savings and investment and reducing illicit capital outflows even more important. Foreign aid remains several percentage points below its recent peak of 7 percent of African GDP reached in 2006, just before the financial crisis.
“The African continent is resource-rich. With good resource husbandry, Africa could be in a position to finance much of its own development,” said AfDB economist Guirane Samba Ndiaye Ncube.
Nigeria, for instance, is the world’s 10th largest oil producer, yet two-thirds of its population lives in poverty. The report calculates that $252.4 billion in net resources have flown out of the country between 1980 and 2009, and illicit flows amount to a little under $250 billion – money that could have been used for development.
South Africa has lost $183.8 billion in net resources over the 30-year period and roughly $170 billion in illicit flows, while Egypt has lost about $130 billion in illicit flows, it said. Corruption was a major factor that led to the Arab Spring and the ouster of former Egyptian President Hosni Mubarak.