World Economy

Illegal Financial Outflows Cost Africa $1t in 50 Years

Illegal Financial Outflows Cost Africa $1t in 50 YearsIllegal Financial Outflows Cost Africa $1t in 50 Years

Africa is loosing over $50 billion each year through illicit financial outflows, the bulk of which are made by multinational companies, former South African president Thabo Mbeki said.

In his address to the 6th session of the Pan African Parliament (PAP) in Midrand, Johannesburg, Mbeki said multinational companies were illegally moving billions of dollars out of Africa, depriving the continent of the much needed cash, Xinhua reported.

"It is estimated that over the last 50 years, Africa lost in excess of $1 trillion in illicit financial outflows," he said. "The figure of $50 billion is therefore an underestimate as it excludes such elements as trade in services and intangibles, proceeds of bribery and trafficking in drugs, people and firearms," said Mbeki.

He said it was wrong for such huge amounts to be illegally transferred out of the continent considering the immense developmental challenges that Africa is facing.

  Stop Illegal Transfer

He called on PAP to implement the 2011 recommendations of the High Panel of the African Ministers of Finance, Planning and Economic Development on steps to be taken in stopping the illegal transfer of these funds by the multinational companies.

He said, "Indeed in its Declaration on Illicit Financial Flows, the AU (African Union) Assembly has expressed the need to ensure that Illicit Financial Flows and their impact on domestic resources mobilization is given the necessary attention by the 3rd International Conference on Financing for Development, and in this regard, this stresses the need for robust international cooperation to address the problem."  Mbeki said the illicit flows contributed a large percentage of the problems which Africa is facing today. "The United Nations has estimated that the number of Africans living on less than $1.25 a day increased from 290 million in 1990 to 414 million in 2010.

In addition, per capita GDP in Africa is one fifth, that is, 20 percent of the global average figure. "The African Development Bank and others estimate that Africa needs an additional $30 to 50 billion annually to address its infrastructure needs," Mbeki said.

The former president called on Africa to do all within its power to ensure that the estimated $50 billion being shipped out per year remains in the continent to address the challenges of poverty and underdevelopment.

In its investigations, the high panel found that 60 percent of the illicit flows are done by large commercial companies. It further found that criminal activities such as drug trafficking accounted for about 30 percent, with corruption contributing to the remaining 10 percent.