Africa may have lost £1tn in illegal flows of money, researchers say

[cory777]

Source: Guardian

Much of illicit outflow has gone into western financial institutions

David Smith

More than £1tn may have flowed out of Africa illegally over the last four decades, most of it to western financial institutions, according to a new report.

Even using conservative estimates, the continent lost about $1.8tn (£1.18tn) – meaning Africans living at the end of 2008 had each been deprived of an average of $989 (£649) since 1970, according to the US-based research body Global Financial Integrity (GFI).

The report says globally in recent years much attention has been focused on corruption – the proceeds of bribery and theft by government officials – and this only makes up about 3% of the cross-border flow of illicit money around the world. The proceeds of commercial tax evasion, mainly through trade mis-pricing, contribute 60% to 65% of the global total, while drug trafficking, racketeering and counterfeiting make up 30% to 35%. The report says Africa's percentages are likely to be roughly the same.

The scourge eats into Africa's total GDP, says the report, Illicit Financial Flows from Africa: Hidden Resource for Development. Losses rose from around 2% of GDP in 1970 to a peak of 11% in 1987, then dropped below 4% for much of the Nineties, only to increase again to 8% of GDP in 2007 and 7% in 2008.

Read more: http://www.guardian.co.uk/world/2010/apr/01/africa-illegal-money-lost

[Mopar151]

1. Kleptocracy (noun):

Kleptocracy, alternatively cleptocracy or kleptarchy, from Greek kleptes (thieves) and kratos (rule), is a term applied to a government that takes advantage of governmental corruption to extend the personal wealth and political power of government officials and the ruling class (collectively, kleptocrats), via the embezzlement of state funds at the expense of the wider population, sometimes without even the pretense of honest service. The term means "rule by thieves". Not an "official" form of government (such as democracy, republic, monarchy, theocracy) the term is a pejorative for governments perceived to have a particularly severe and systemic problem with the selfish misappropriation of public funds by those in power.

http://en.wikipedia.org/wiki/Kleptocracy

A kleptocratic ruler typically treats their country's treasury as though it were their own personal bank account, spending the funds on luxury goods as they see fit. Many kleptocratic rulers also secretly transfer public funds into secret personal numbered bank accounts in foreign countries in order to provide them with continued luxury if/when they are eventually removed from power and forced to flee the country.

More at the link. the top ten list makes me ill

[Raksha]

2. This just outrages me when I think how much misery could be alleviated with an extra $987 per capita

From the Guardian article: Africa lost around $29bn a year between 1970 and 2008, of which the Sub-Saharan region accounted for $22bn. On average, fuel exporters including Nigeria lost capital at the rate of nearly $10bn a year. "The impact of this structure and the funds it shifts out of Africa is staggering. It drains hard currency reserves, heightens inflation, reduces tax collection, cancels investment, and undermines free trade. It has its greatest impact on those at the bottom of income scales in their countries, removing resources that could otherwise be used for poverty alleviation and economic growth."

It says that the huge outflow explains why aid efforts to reduce poverty have underachieved in Africa. "According to recent studies by GFI and other researchers, developing countries lose at least $10 through illegal flight capital for every $1 they receive in external assistance."

I have a friend who was recently in Tanzania as part of a blogging and volunteering expedition for a grassroots charity that focuses on locally-defined projects. This project involved installing a rainwater storage tank to eliminate the daily 3-hour trek for clean drinking water, which is a major problem in many parts of Africa. The 60-year old widow who was the recipient of this tank (because she's raising her three grandchildren) was grateful because it would give her that much more time for farming.

So when I hear that revenue loss on this scale "has its greatest impact on those at the bottom of income scales in their countries..." I know EXACTLY what that means! $10 in illegal capital flight to every $1 in external assistance? Sheesh, it's like trying to plug a hole in a dam!

[jberryhill]

3. Meanwhile, Somali Pirates Invest In Kenya....

If word on the street in Nairobi is to be believed....

http://www.huffingtonpost.com/2010/01/02/pirate-ransom-money-kenya_n_409219.html


NAIROBI, Kenya — Property prices in Nairobi are soaring, and Somali pirates are getting the blame.

[AlphaCentauri]

4. All the countries in the third world suffer this

No surprise how the US and the EU get new capital funding into their economies. Capitalism is consuming system so it de attach the poor from their resources.

[izquierdista]

5. And it will continue

As long as it is easier to steal money than to earn it by working. It won't be stopped by arresting the thief; Milosevic's family is going to enjoy the money he stole for a long time to come. It only stops when taxes, social disapproval, and confiscation of ill-gotten gains becomes the norm rather than the exception.

[conspirator]

6. It's called Neocolonialism: 1) Install puppets 2) Drain resources out n/t

[notadmblnd]

7. It's no wonder with all those e-mails from people in Africa

wanting to share their fortunes with us? :sarcasm: