Billions Get Lost In Africa Every Year Due To Illegal Cash Flows

By Nsunjo Erica

A United Nations study has shown that Africa loses nearly $89 billion shillings a year in illicit financial flows such as tax evasion embezzlement and corruption.

The report released by the United Nations Conference on Trade and Development on Monday calls Africa a ‘net creditor to the world’, this means that Africa is a nation with a cumulative balance of payment surplus.

According to the report, the total figure of the amount lost by Africa is actually higher than what the continent receives in Official development assistance from foreign states.

The report indicated that the export of commodities such as gold, diamond, and platinum is responsible for almost half of the total figure lost every year. Companies under-declare the value of exports, cheating on payments of taxes and royalties.

African states are undermining the impact on the undervaluing of an export commodity dominating the market. The UN agency added that a commodity’s true value deprives developing countries of foreign exchange and tax revenue.

Analysts and Economists have argued that despite being aid-dependent, Africa is actually a net exporter of capital due to tax dodging and overtax exemptions to big companies that would help boost the county’s economy and people hiding cash in tax havens.

The UN added that the lost funds following continued illegal cash flows could instead be used to provide social services such as staffing hospitals which have been strained by the COVID-19 pandemic and injecting more in school reopening.

Activists say countries should introduce tough regulations on multinational companies and on practices such as profit repatriation to closely monitor the lawful contribution of these companies towards the country’s economic development.

Corruption and Embezzlement amongst African countries is another reason laying the foundation for illegal cash flows, governments are implementing illegal regulation for companies especially during importation and exportation and payment of taxes.

Corrupt government officials in Africa are corrupting the economic system in the continent and according to analysts, the continent is still fully dependent on foreign aid and without it, Africa is to fall in a sorry state.

READ: KRA Staff To Work In Companies To Catch Tax Cheats