Illicit trade keeps Africa poor

Perceptions of Africa as a sponge for foreign aid and investment are challenged in a joint report by the African Development Bank (AfDB) and Global Financial Integrity (GFI), which found that Africa suffered between US$597 billion and US$1.4 trillion in net capital outflows between 1980 and 2009. “The traditional thinking has always been that the West is pouring money into Africa through foreign aid and other private sector flows, without receiving much in return. Our report turns that logic upside down – Africa has been a net creditor to the rest of the world for decades,” said Raymond Baker, president of GFI, a Washington-based research and advocacy organisation. Africans themselves remain poor because much of the trade is illegal. Titled “Illicit Financial Flows and the Problem of Net Resource Transfers from Africa: 1980-2009,” the report does not include much of the proceeds of drug trafficking, human smuggling, and other criminal activities settled in cash. “The resource drain from Africa over the last 30 years – almost equivalent to Africa’s current GDP – is holding back Africa’s lift-off,” said Prof. Mthuli Ncube of the African Development Bank. Clamping down on corruption would mean that Africa could finance its own growth. “The African continent is resourcerich. With good resource husbandry, Africa could be in a position to finance much of its own development,” said Ncube. “More than one trillion dollars has flowed illicitly out of Africa over the past 30 years, dwarfing capital inflows, and stifling economic development,” added GFI Chief Economist Dev Kar. INSERT $1trillion Illicit capital outflow from Africa over past 30 years