Press Conferences | UNCTAD
UNCTAD/PRESS/PR/2020/28*
Original: English
AFRICA COULD GAIN $89 BILLION ANNUALLY BY CURBING ILLICIT FINANCIAL FLOWS, UN SAYS
The financing gap to achieve the Sustainable Development Goals, estimated at $200 billion per year, could be nearly halved
Geneva, 28 September 2020 – Every year, an estimated $88.6 billion, equivalent to 3.7% of Africa’s GDP, leaves the continent as illicit capital flight, according to UNCTAD’s Economic Development in Africa Report 2020 launched today.
Illicit financial flows (IFFs) are movements of money and assets across borders which are illegal in source, transfer or use, according to the report entitled “Tackling illicit financial flows for sustainable development in Africa.”
It shows that these outflows are nearly as much as the combined total annual inflows of official development assistance, valued at $48 billion, and yearly foreign direct investment, pegged at $54 billion, received by African countries – the average for 2013 to 2015.
“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.
These outflows include illicit capital flight, tax and commercial practices like mis-invoicing of trade shipments and criminal activities such as illegal markets, corruption or theft.
From 2000 to 2015, the total illicit capital flight from Africa amounted to $836 billion. Compared to Africa’s total external debt stock of $770 billion in 2018, this makes Africa a “net creditor to the world”, the report says.
IFFs related to the export of extractive commodities ($40 billion in 2015) are the largest component of illicit capital flight from Africa. Although estimates of IFFs are large, they likely understate the problem and its impact.
IFFs undermine Africa’s potential to achieve the SDGs
IFFs represent a major drain on capital and revenues in Africa, undermining productive capacity and Africa’s prospects for achieving the Sustainable Development Goals (SDGs).
For example, the report finds that, in African countries with high IFFs, governments spend 25% less than countries with low IFFs on health and 58% less on education. Since women and girls often have less access to health and education, they suffer most from the negative fiscal effects of IFFs.
Africa will not be able to bridge the large financing gap to achieve the SDGs, estimated at $200 billion per year, with existing government revenues and development assistance.
The report finds that tackling capital flight and IFFs represents a large potential source of capital to finance much-needed investments in, for example, infrastructure, education, health, and productive capacity.
For example, in Sierra Leone, which has one of the highest under-five mortality rates on the continent (105 per 1,000 live births in 2018), curbing capital flight and investing a constant share of revenues in public health could save an additional 2,322 of the 258,000 children born in the country annually.
In Africa, IFFs originate mainly from extractive industries and are therefore associated with poor environmental outcomes.
The report shows that curbing illicit capital flight could generate enough capital by 2030 to finance almost 50% of the $2.4 trillion needed by sub-Saharan African countries for climate change adaptation and mitigation.
IFFs are concentrated in high-value, low-weight commodities, especially gold
The report’s analysis also demonstrates that IFFs in Africa are not endemic to specific countries, but rather to certain high-value, low-weight commodities.
Of the estimated $40 billion of IFFs derived from extractive commodities in 2015, 77% were concentrated in the gold supply chain, followed by diamonds (12%) and platinum (6%).
This finding offers new insights for researchers and policymakers studying how to identify and curb IFFs and is relevant to all gold-exporting countries in Africa, for example, despite their differing local conditions.
The report aims to equip African governments with knowledge on how to identify and evaluate risks associated with IFFs, as well as solutions to curb IFFs and redirect the proceeds towards the achievement of national priorities and the SDGs.
It calls for global efforts to promote international cooperation to combat IFFs. It also advocates for strengthening good practices on the return of assets to foster sustainable development and the achievement of the 2030 Agenda for Sustainable Development.
Need to collect better trade data to detect risks related to IFFs
Specific data limitations affected efforts to estimate IFFs. Only 41 out of 54 African countries provide data to the UN International Trade Statistics Database (UN Comtrade) in a continuous manner allowing trade statistics to be compared over time.
The report highlights the importance of collecting more and better trade data to detect risks related to IFFs, increase transparency in extractive industries and tax collection.
The UNCTAD Automated System for Customs Data (ASYCUDA), including its new module for mineral production and export, called MOSES (Mineral Output Statistical Evaluation System), are potential available solutions.
African countries also need to enter automatic exchange of tax information agreements to effectively tackle IFFs.
Africa should improve regional cooperation on IFFs and tax
Although IFFs are a major constraint to domestic resource mobilization in Africa, African governments are not yet sufficiently engaging in the reform of the international taxation system.
Transparency and cooperation between tax administrations globally and within the continent is key to the fight against tax evasion and tax avoidance.
Regarding regional cooperation on taxation within the continent, the African Tax Administration Forum can provide a platform for regional cooperation among African countries.
Regional knowledge networks to enhance national capacities to tackle proceeds of money laundering and recover stolen assets, including within the context of the African Continental Free Trade Area (AfCFTA), are crucial in the fight against corruption and crime-related IFFs, the report says.
Tackling IFFs requires international action
Tax revenues lost to IFFs are especially costly for Africa, where public investments and spending on the SDGs are most lacking. In 2014, Africa lost an estimated $9.6 billion to tax havens, equivalent to 2.5% of total tax revenue.
Tax evasion is at the core of the world's shadow financial system. Commercial IFFs are often linked to tax avoidance or evasion strategies, designed to shift profits to lower-tax jurisdictions.
Due to the lack of domestic transfer pricing rules in most African countries, local judicial authorities lack the tools to challenge tax evasion by multinational enterprises.
But IFFs are not just a national concern in Africa. Nigeria’s President Muhammadu Buhari said: “Illicit financial flows are multidimensional and transnational in character. Like the concept of migration, they have countries of origin and destination, and there are several transit locations. The whole process of mitigating illicit financial flows, therefore, cuts across several jurisdictions.”
Solutions to the problem must involve international tax cooperation and anti-corruption measures. The international community should devote more resources to tackle IFFs, including capacity-building for tax and customs authorities in developing countries.
African countries need to strengthen engagement in international taxation reform, make tax competition consistent with protocols of the AfCFTA and aim for more taxing rights.
* Contacts: UNCTAD Communications and External Relations Section, +41 22 917 80 33, +41 79 502 43 11, unctadpress@unctad.org, http://unctad.org/press
To receive our press material, please register at: http://unctad.org/en/Pages/RegisterJournalist.aspx.
Subject:
Publication of the Economic Development in Africa Report 2020 - Tackling Illicit Financial Flows for Sustainable Development in Africa
Speakers:
· H.E. Mr Oluyemi Oluleke Osinbajo - Vice President of the Federal Republic of Nigeria
· Mukhisa Kituyi, UNCTAD Secretary-General
· Paul Akiwumi, Director of the Division on Africa, LDCs and Special Programmes, UNCTAD
1
1
1
Statements , Press Conferences | UNCTAD
Rebeca Grynspan, Secretary-General of UN trade and development (UNCTAD) briefs the media following the opening of the 16th Conference of the United Nations on Trade and Development (UNCTAD16) in Geneva.
1
1
1
Press Conferences | UNCTAD , WMO , WFP , UN WOMEN , WHO , OCHA
Rolando Gómez, Chief of Section, Public Information, chaired a hybrid press briefing, which was attended by spokespersons and representatives of the World Food Programme, UN Women, the Office for the Coordination of Humanitarian Affairs, the World Health Organization, the United Nations Conference on Trade and Development and the World Meteorological Organization.
1
2
1
Press Conferences | WMO
WMO Greenhouse Gas Bulletin
1
1
1
Press Conferences | WMO , UNICEF , UNDP , ICRC , WHO , OCHA
Alessandra Vellucci, Director of the United Nations Information Service in Geneva, chaired a hybrid press briefing, which was attended by the spokespersons and representatives of the United Nations Development Programme, United Nations Children’s Fund, the World Health Organization, the Office for the Coordination of Humanitarian Affairs, the World Meteorological Organization, and the International Committee of the Red Cross.
2
5
1
2
Press Conferences | UNCTAD
UNCTAD / 16TH CONFERENCE ON TRADE AND DEVELOPMENT
As the global economy undergoes tectonic shifts in trade, finance and technology, global economic and development leaders will gather in Geneva this month to chart a path through mounting uncertainty and fragmentation. Ahead of the 16th session of the United Nations Conference on Trade and Development (UNCTAD16), Secretary-General Rebeca Grynspan outlines how countries can navigate record debt, disrupted supply chains, volatile investment flows and accelerating digital transformation. UNCTAD / UNTV CH
1
1
1
Press Conferences | IFRC , UN WOMEN , UNHCR , UNICEF , UNRWA , WHO
Alessandra Vellucci, Director of the United Nations Information Service (UNIS) in Geneva, chaired the hybrid briefing, which was attended by spokespersons and representatives from the United Nations Entity for Gender Equality and the Empowerment of Women (UN Women), the International Federation of Red Cross and Red Crescent Societies, the United Nations High Commissioner for Refugees, the United Nations Children's Fund, the United Nations Relief and Works Agency for Palestine Refugees in the Near East, the Office of the United Nations High Commissioner for Human Rights, and the World Health Organization.
1
1
1
Press Conferences | UNECE
UNECE Press conference on the Ministerial Meeting on Housing Affordability and Sustainablility
On 8 October 2025, UNECE member States' ministers meet to focus on the urgent challenges and strategic priorities surrounding housing affordability and sustainability in the UNECE region. Ten years after the adoption of the Geneva UN Charter on Sustainable Housing, ministers will highlight challenges and key priorities for the achievement of the Charter's objectives, and present good practice and strategic solutions in this regard. As the key outcome of the meeting, ministers will be invited to agree on practical commitments towards sustainable and affordable housing.
The meeting will take place as part of the eighty-sixth session of the UNECE Committee on Urban Development, Housing and Land Management (8–10 October 2025).
1
1
1
Press Conferences | OCHA , UNHCR , UNICEF , UNOG , WHO , IPU
Alessandra Vellucci, Director of the United Nations Information Service in Geneva, chaired a hybrid press briefing, which was attended by the representatives and spokespersons of the Office for the Coordination of Humanitarian Affairs, UNICEF, the World Health Organisation, and the International Parliamentary Union.
1
1
1
Press Conferences | UNHCR , UNICEF , UNIS , WHO
Alessandra Vellucci, Director of the United Nations Information Service in Geneva, chaired a hybrid press briefing, which was attended by the spokespersons and representatives of the United Nations Children’s Fund, the World Health Organization, the United Nations Refugee Agency, and the International Committee of the Red Cross.
1
1
1
Press Conferences | HRC , OHCHR
Report of the Independent Expert on Human Rights situation in the Central African Republic.
1
1
1
Press Conferences | UNECE , WHO , OCHA , UNHCR , UNICEF
Alessandra Vellucci, Director of the United Nations Information Service in Geneva, chaired a hybrid press briefing, which was attended by the representatives and spokespersons of the United Nations Assistance Mission in Afghanistan, the United Nations High Commissioner for Refugees (the UN Refugee Agency), the Office for the Coordination of Humanitarian Affairs, the United Nations Children Fund, the United Nations Economic Commission for Europe and the World Health Organization.
1
1
1
Press Conferences | WHO , FAO
Michele Zaccheo, Chief of the Radio, TV and Webcast Section at the United Nations Information Service in Geneva, chaired a hybrid press briefing, which was attended by spokespersons and representatives of the Food and Agricultural Organization and the World Health Organization.