Africa is losing nearly $1 billion dollars every week through illicit financial flows out of the continent, and chiefly through transactions by multinational companies, an AU agency has said on Friday.
The New Partnership for Africa’s Development (NEPAD), an AU policy wing, said in a statement that the world’s poorest region lost 900 billion dollars in the illegal financial flows between 1970 and 2008.
According to NEPAD, commercial transactions by multinationals accounted for 60 per cent of the unlawful flows, followed by criminal activities such as trade in drugs, weapons and people at 35 per cent while bribery and embezzlement made up five per cent.
Channels for the illegal flows, according to NEPAD, were trade mispricing, investment-related transactions and offshore tax havens.
A report commissioned by NEPAD and the UN’s Economic Commission for Africa also said, for example, a company or official could say a piece of imported equipment costs 100 million dollars when in fact it was exported with an 80 million dollars price tag, NEPAD said in the statement.
The difference can be discreetly deposited in an offshore bank account.
“The development impact of these illicit flows has resulted in loss of tax revenues, damage to economic potential and weakening of governance,’’ the report said.
A report by the African Development Bank earlier this year also showed that Africa was a net creditor to the world through illegal outflows worth between 597 billion dollars and 1.4 trillion dollars in the three decades to 2009.