Corruption and tax evasion cost Africa hundreds of billions in the last decade, a new study shows, depriving the poorest continent of capital sorely needed for growth and development.
The study by the African Development Bank and Washington-based Global Financial Integrity, which is to be published Friday, estimates that Africa's “illicit outflows” jumped after the turn of the century and peaked at $103.7 billion in 2007, The Wall Street Journal reports. The price of oil and other commodities surged in that decade, offering many opportunities for officials to skim profits and for companies to evade tax, the report says.
Outflows declined after 2007 as the global financial crisis curbed clandestine trade and graft along with legitimate economic activity. But the $74.2 billion that left Africa illicitly in 2009 was three times the amount of development aid the continent received that year, the groups found.
"That could have gone a long way in financing Africa's growth and development," said Mthuli Ncube, the African Development Bank's chief economist.
In three decades through 2009, the latest year for which full data were available, $1.3 trillion was lost to Africa through clandestine channels like untaxed transfers to foreign accounts and bribes to officials, the study estimates. The bank and Global Financial Integrity calculated illicit outflows by comparing official numbers for investment, aid and export earnings with what each government invested domestically and abroad. The calculations are estimates, drawing averages from incomplete data, and don't account for bulk cash transfers by criminals such as drug runners and kidnappers.
Previous work by Global Financial Integrity showed that Asia, Latin America and other developing regions have lost even more money illicitly in recent years. But flows out of Africa grew faster, largely thanks to the commodities boom. The lost revenue was also felt more severely in relatively smaller African economies.
Many African leaders seem to have built up fabulous wealth from their nations' resources. Last year James Ibori, ex-governor of Nigeria's oil-rich Delta State, admitted siphoning some $250 million in state funds into foreign accounts and spending it on mansions, cars and a private jet.
In France, judges issued an arrest warrant last year for Teodoro Nguema Obiang Mangue, son of Equatorial Guinea's dictator, alleging that he used embezzled funds to buy luxurious homes in Paris and Malibu. A British High Court in 2007 ruled that former Zambian President Frederick Chiluba stole $46 million in state funds during his decade as president through 2002, laundering it through British accounts to spend on an extravagant wardrobe that included more than 100 pairs of shoes with raised heels to compensate for his short stature. Chiluba died in 2011.
Nigeria, Egypt and South Africa sent the most capital abroad illicitly between 1980 and 2009, the report estimates. But they are also the continent's biggest economies, so their problems may not be any worse than average.
Oil exporters such as Angola and Equatorial Guinea lost almost four times as much per capita as other African countries, about $1,631 annually compared with $441.