Capital flight from Africa continues to be a major thorn in the continent's side following a new progress report that says up to $60 billion is leaked through illicit financial flows every year.
The new amount exceeds the official development assistance to the continent, which stood at $46.1bn in 2012. The effects of illicit financial outflows is now negating the current economic development of the continent and draining foreign exchange reserves, reducing tax collection, canceling out investment inflows and worsening of poverty. Theft, bribery and criminal activities, including drug trading and tax evasion, are said to be the main forms of illicit financial flows on the continent. Commercial money (tax evasion and trade and service mispricing) through multinational companies constitute the largest component of financials flow, followed by proceeds from criminal activities and corruption. Activists say the panel reconfirms that billions of funds are flowing out of Africa. Its findings should strengthen calls to tackle lax trade regulation, inconsistent tax policy and enforcement, collusion, and corporate greed.
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