Bibliography

According to this report, in the 39-year period from 1970 through 2008, illicit financial outflows from Africa totalled US$854 billion. This estimate is regarded as conservative, since it addresses only one form of trade mispricing, does not include the mispricing of services, and does not encompass the proceeds of smuggling – the adjusted figure is closer to $1.8 trillion. This massive flow of illicit money out of Africa is facilitated by a global shadow financial system comprising tax havens, secrecy jurisdictions, disguised corporations, anonymous trust accounts, fake foundations, trade mispricing, and money laundering techniques. The cost to African development is great, as the outflow 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. Addressing this problem requires concerted effort by both African nations and by Western countries, Global Financial Integrity argues. The outflow from Africa and the absorption into western economies deserve equal attention. Through greater transparency in the global financial system, illicit outflows can be substantially curtailed, thereby enhancing growth in developing countries and at the same time stabilising the economies of richer countries.