Africa is losing nearly $ 89 billion a year, equivalent to 3.7% of Africa’s GDP, due to tax evasion and corruption in exports, according to a new UN study. At the same time, the amount is comparable with the help of Africa from the world community.
The United Nations Conference on Trade and Development (UNCTAD) has released a report entitled «Tackling Illicit Financial Flows for Sustainable Development in Africa».
Every year, an estimated $88.6 billion leaves the continent as illicit capital flight from the export of commodities such as gold, diamonds and platinum, according to the official website of UNCTAD.
Exports in this area are carried out using illegal financial flows or with an underestimated value of commodity. It helps conceal trade profits abroad, deprives developing countries of foreign exchange and erodes their tax base.
– Illicit financial flows rob Africa and its people of their prospects, undermining transparency and accountability and eroding trust in African institutions, – said UNCTAD Secretary-General Mukhisa Kituyi.
Interestingly, the combined total of both official development assistance and foreign direct investment received by Africa averaged $102 billion annually.
UNCTAD said African countries generally aren’t doing enough to reform the international tax system in ways that could help, and said local judicial authorities often lack proper tools to combat tax evasion.
The UN estimates that the African continent needs at least $ 200 billion to cope with the socio-economic costs of the COVID-19 pandemic, in addition to emergency health spending.