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Ethiopia is among the top 10 African countries in terms of being a source of illicit financial flows (IFFs), most of which makes ways to the developed world. #Africa February 10, 2015

Posted by OromianEconomist in Africa, Africa and debt, Illicit financial outflows from Ethiopia.
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 OIllicit financial outflows from Africa Ethiopia makes among top 10

 With Nigeria leading the pack of top loser counties in Africa, Ethiopia alone lost a cumulative of USD 16.5 billion between 1970 and 2008. But, since 2010, Ethiopia more likely lost USD 10 billion which could have shortened significantly the 13 years journey that the country have taken to achieve MDG4 (reduce child mortality by two thirds ) to nine years. In addition to that, the panel found out that failing to curtail illicit financial flows cost the country some six percent of its GDP annually.

Ethiopia: Panel Names One of Ethiopia Top Sources for Illicit Financial Flow

By Berhanu Fekade,  All Africa

 

A high level panel delegated by the African Union (AU) and chaired by Thabo Mbeki, the former president of South Africa, has found Ethiopia to be among the top African nations in terms of being a source of illicit financial flows (IFFs), most of which makes ways to the developed world.

The panel was tasked to find out how prone Africa is for a systematic financial theft which mostly is orchestrated by giant multinational companies operating in the continent. The panel’s report dubbed “track it, stop it and get it” found that in five decades alone, the continent is estimated to have lost one trillion dollars; and currently nations including Ethiopia are losing some 60 billion dollars due to illicit financial flows across the board. With Nigeria leading the pack of top loser counties in Africa, Ethiopia alone lost a cumulative of USD 16.5 billion between 1970 and 2008. But, since 2010, Ethiopia more likely lost USD 10 billion which could have shortened significantly the 13 years journey that the country have taken to achieve MDG4 (reduce child mortality by two thirds ) to nine years. In addition to that, the panel found out that failing to curtail illicit financial flows cost the country some six percent of its GDP annually.

This figure puts the country among the top ten losers; rather creditors via illicit financial flows. Next to Nigeria, countries like Egypt, South Africa, Morocco, Angola, Algeria, Cote d’Ivorie, Sudan, Ethiopia and the Democratic Republic of Congo are the top ten countries which are still losing out billions of dollars in form of “illegally earned, transferred or used” money as it (illicit financial flow) is defined by the panel. Names of the top illicit finance receiving nations include the US, China, India, Spain, France, Japan, Germany, South Korea, Mexico, and the like.

During the summit of heads of state and government which was concluded late last week, the panel appeared before the leaders to present its report on the findings of the three-year-long study that the panel has conducted. In its 15 main findings, the report made it loud and clear that the amount of money leaving Africa via IFFs is muscling up over the years. In 2010, the sums of dollars that flew out of the continent are estimated to be 60 billion dollars. Hence, the report went on to indicate that time has come to prompt the continent to the fact that illicit financial flows are political issues. According to Mbeki, the leaders have decided to adopt the report during the 24th ordinary summit.

The report basically made three classifications regarding the way illicit finances are flowing: via commercial activities, falsification of prices (trade mispricing), quantities and qualities of traded goods. Transfer pricing, profit shifting, tax evasion and the tax incentives which lack cost benefit analysis are some of the systemic commercial thefts the high level panel reported upon. Arms and drugs smuggling, human trafficking, poaching, oil and mineral theft are the criminal activities facilitated by illicit financial flows, the panel argued. Corruption and nontransparent deals are also the impeding factors to curtail the flight of finance from Africa. However, some studies allude to the fact that it is corruption which is extremely bleeding the continent really bad. These studies indicate that, up to 150 billion dollars annually is lost due to corrupt systems along the board in the continent.

To make matters worse, the continent faces huge gaps to finance infrastructural requirements as well as human development issues. The illicit flights alone largely exceed the official development assistants many African nations receive, Mbeki noted.

 

Read More at:

http://allafrica.com/stories/201502090215.html

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