Developing Countries Lost Over $ 1 Trillion To Illicit Financial Flows
WakeUpAfrica assessment of the 2017 Global Financial Integrity report, 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 countries 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.”
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