Over the past 50 years, it is estimated that Africa has lost more than 1,000
billions of dollars due to illicit financial flows (IFFs), (Kar and Cartwright-
Smith, 2010; Kar and Leblanc, 2013). This figure is roughly equivalent to the whole
official development assistance received by Africa during the same period
of time2. Currently, it is estimated that Africa loses more than 50 billion
dollars a year from illicit financial flows. But these estimates may be
very short of reality because there are no precise data for all
African countries, as they often exclude certain forms of financial flows
which by nature are secret and therefore cannot be correctly estimated, for
example sums resulting from corruption and drug trafficking,
human trafficking and firearms trafficking. The sums lost each
year by Africa because illicit financial flows probably exceed
considerably the figure of 50 billion dollars.
These capital outflows are very worrying given the lack of
growth, high levels of poverty, resource needs and
the unfavorable trend in official development assistance. While the countries
African countries have recorded an average growth of about 5% per year since
fifteen years, this rate of economic growth is encouraging
but insufficient. It is for example much lower than double-digit growth
which has propelled the transformation of economies in parts of Asia. In
Moreover, the benefits of this growth are limited to the top of the distribution
income, and they are not accompanied by job creation. Outside
questions of equity, this situation also means that growth is not
not sustainable, due to the risk of social unrest. The knocking super-cycle
worldwide commodities and which explains the growth in
Africa, is coming to an end, while macroeconomic factors like
the alleviation of this
This
Multilateral debt : Debt that is owed to the World Bank, IMF, regional development banks like the African Development Bank, and other multilateral institutions like the European Development Fund.
Private debt : Loans contracted by private borrowers regardless of the lender.
Public debt : All loans contracted by public borrowers.
will have a temporary effect.
Poverty remains a major concern in Africa both in absolute terms and
relative. The number of Africans living on less than $1.25 a day would be
increased from 290 million in 1990 to 414 million in 2010 (United Nations, 2013).
This is because population growth is increasing faster than
the number of people moving out of poverty. Moreover, the GDP
GDP
Gross domestic product
GDP reflects the total wealth produced in a given territory, estimated by the sum of the added values.
The Gross Domestic Product is an economic aggregate that measures the total production in a given territory, estimated by the sum of the added values. This measurement is notoriously incomplete; it does not take into account, for example, all activities that are not the subject of a market exchange. The change in GDP from one period to another is called economic growth.
per inhabitant
in Africa was around 2,000 dollars in 2013, which does not represent
than one-fifth of the world level (FMI
FMI
International Monetary Fund
The IMF was created in 1944 in Bretton Woods (with the World Bank, its twin institution). Its purpose was to stabilize the international financial system by regulating the flow of capital.
To date, 190 countries are members (the same as at the World Bank).
Click for details. , 2014). In Africa, poverty
is multidimensional: it concerns limited access to education, healthcare
health, housing, drinking water and sanitation facilities. This
situation makes it possible to better put into context the figure of 50 billion
dollars per year of illicit financial flows.
The Resource Needs of African Countries for Service Delivery
social, infrastructure and investment also underline the importance
elimination of illicit financial flows from the continent.
According to current demographic trends, Africa will have the population of
most young people in the world. In 2050, the median age of Africans
will be 25 years, while the world average will be 36 years (United Nations Secretariat Population Division, 2012). Infrastructure constraints
are also holding back growth, as is the low savings rate
and the rate of investment in the African continent. Thus, in 2012, the rates of
gross capital formation in Nigeria and South Africa were 13% and
19% respectively, compared to 49% in China and 35% in India (Statistics Division
from the UN Secretariat, 2014; world Bank
world Bank
BM
The World Bank brings together two organizations, the IBRD (International Bank for Reconstruction and Development) and the IDA (International Development Association). The International Bank for Reconstruction and Development (IBRD) was created in July 1944 in Bretton Woods (United States), on the initiative of 45 countries meeting for the first United Nations Monetary and Financial Conference.
In 2022, 189 countries are members.
Click for details. , 2014). Yet it is estimated that
Africa needs to find 30 to 50 billion dollars a year to finance
its equipment (Foster and Briceño-Garmendia, 2010; African Development Bank
development, 2014).
The Group considered the fact that when these needs are compared to the evolution
unfavorable official development assistance, Africa cannot remain
indifferent to the problems posed by illicit financial flows. Facts
new on the world scene suggest that the problem posed by these
illicit financial flows is increasingly acute. The resources that Africa receives
from its external partners in the form of official development assistance
are not increasing because of the financial difficulties experienced by the
partners, who on the contrary seek to reduce this type of expenditure. Africa
will therefore need to find on the continent itself the means to finance
its development and reduce its dependence on public aid.
Illicit financial flows are also of concern from the point of view of their
impact on governance. To successfully bring these resources out of the continent,
officials usually have to be bribed and this can jeopardize the
state structures, because the actors concerned may have had the means
that hamper the proper functioning of regulatory institutions.