Developing countries lost over $ 1 trillion to Illicit Financial Flows from 2005-2014

Tracking IFFs

iWatch Africa assessment of a 2017 report by the Global Financial Integrity has revealed that illicit financial flows (IFFs) from developing and emerging economies kept pace at nearly US$1 trillion in 2014. The report pegs illicit financial outflows at 4.2-6.6 percent of developing country total trade in 2014, the last year for which comprehensive data are available.

Titled “Illicit Financial Flows to and from Developing Countries: 2005-2014,” the report is the first global study at GFI to equally emphasize illicit outflows and inflows. Each is found to have remained persistently high over the period between 2005 and 2014. Combined, these outflows and inflows are estimated to account for between 14.1 and 24.0 percent of developing country trade, on average.

“The order of magnitude of these estimates, much more so than their exactitude, warrants serious attention in both the developing countries and the wealthier world,” said GFI President Raymond Baker, a longtime authority on financial opacity. “Years of experience with businesses and governments in the developing world have taught us that the decision to bring illicit flows into a particular developing country often marks only the first phase of a strategy to subsequently move funds out of the country. Together, illicit inflows and outflows sap the crucial financial resources needed to reach the Sustainable Development Goals.”

Read Also: Fact Check: Businesses to incur 5% VAT cost despite government claims that VAT has not been increased

Key Additional Findings

  • An average of 87 percent of illicit financial outflows over the 2005-2014 period were due to the fraudulent misinvoicing of trade.
  • Illicit financial outflows from Sub-Saharan Africa ranged from 5.3 percent to 9.9 percent of total trade in 2014, a ratio higher than any other geographic region studied.
  • Total illicit financial flows (outflows plus inflows) grew at an average rate of between 8.5 percent and 10.1 percent a year over the ten-year period.
  • In 2014, outflows are estimated to have ranged between $620 billion and $970 billion, while inflows ranged between $1.4 trillion and $2.5 trillion.

Credit: Global Financial Integrity

Show More

Gideon Sarpong

2017 Thomson Reuters Foundation Fellow: Gideon Sarpong (G. K. Sarpong) is a media practitioner with over six years of experience in content development and management, data and investigative journalism, policy analysis, production and e-commerce strategizing. Gideon is currently Director of Policy and News Content at iWatch Africa. He is also the Brands and Communication Manager for Football 360, Kwese SportsXtra, on KFS and Celebrity Fanzone, The Tonight Show, and After Hours. Gideon is an e-commerce consultant for Department of Geography & Regional Planning and Department of Religion & Human Values at the University of Cape Coast. He is a columnist for several local and international news portals. Gideon holds a Post Graduate Diploma in Policy Journalism and is committed to promoting transparency and accountability using investigative & data journalism. Gideon is an author with over eight publications; a fellow of the Young African Leadership Initiative (YALI), Thomson Reuters Foundation (Wealth of Nations Program) and Bloomberg Data for Health Program.

Leave a Reply

Your email address will not be published. Required fields are marked *