Posted: Tuesday 12th August 2014 at 17:13 pm

Obama urged to stem illicit financial flows from Africa

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Washington, DC, August 12, GNA – United States President Barack Obama has been urged to stem the flow of the $55.6 billion that has left Africa illegally each year over the last decade, and to address America’s role as a major facilitator of such outflows.

The call came from Washington-based Global Financial Integrity (GFI), as African leaders arrived in the US capital for the historic US-Africa Leaders Summit.

GFI said that the Obama administration and African leaders should prioritise efforts to curb the illicit capital flight from Africa that has totalled $555.8 billion in the last 10 years.

‘Illicit financial outflows are by far the most damaging economic problem facing Africa,’ said GFI President Raymond Baker, who sits on the UN High Level Panel on Illicit Financial Flows from Africa.

‘In 2011 alone, $76.9 billion flowed illegally out of Africa. That’s nearly $77 billion that could have been invested in local businesses, in healthcare, in education, or in infrastructure,’ Mr. Baker said

‘It’s money that could have been used to help pull people out of poverty and save lives. This Summit provides an historic opportunity for the United States and for leaders across Africa to focus their efforts on curtailing this haemorrhage of illicit capital.’

GFI research finds that $555.8 billion flowed illicitly out of Africa between 2002 and 2011, fuelling crime, corruption, and tax evasion, while simultaneously draining hundreds of billions of dollars from African economies.

The problem is so severe that a May 2013 joint report from GFI and the African Development Bank found that, after adjusting all recorded flows of money to and from the continent (e.g. debt, investment, exports, imports, foreign aid, remittances, etc.) for illicit financial outflows between 1980 and 2009, Africa was a net creditor to the rest of the world to the tune of between $597 billion and $1.4 trillion.

‘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 research has turned that logic upside down – Africa has been a net creditor to the rest of the world for decades,’ added Mr. Baker, a long-time authority on financial crime.

‘The implication of this finding is broad and profound: More money flows out of Africa than flows in. Without concrete action, the drain on the continent is only going to grow larger.’

GFI, a research and advocacy organisation, highlighted the role of the US as a major facilitator of such outflows.

‘For every country losing money illicitly, there is another country absorbing it. Illicit financial outflows are facilitated by financial opacity in tax havens and in Western economies like the United States,’ noted Heather Lowe, GFI’s legal counsel and director of government affairs.

‘Indeed, the United States is the second easiest country in the world—after Kenya—for a criminal, kleptocrat, or terrorist to incorporate an anonymous company to launder their ill-gotten-gains with impunity. It’s high time that the US government come to terms with this reality and lay out specific policies, which it intends to implement to curb its status as a dirty money haven,’ she said.

The three-day US-Africa Leaders Summit, the first such event of its kind, is the largest event any US President has held with African heads of state and government.

The White House says the Summit will build on Mr. Obama’s trip to Africa in 2013 and will strengthen ties between the US ‘and one of the world’s most dynamic and fastest growing regions’.

Specifically, it is expected that the August 4-6 Summit would advance the Obama administration’s focus on trade and investment in Africa and highlight America’s commitment to Africa’s security, its democratic development, and its people.

At the same time, it will highlight the depth and breadth of America’s ‘commitment to the African continent, advance our shared priorities and enable discussion of concrete ideas to deepen the partnership’.

The White House added: ‘At its core, this Summit is about fostering stronger ties between the United States and Africa.’

The theme of the Summit is ‘Investing in the Next Generation’.

‘Focusing on the next generation is at the core of a government’s responsibility and work, and this Summit is an opportunity to discuss ways of stimulating growth, unlocking opportunities, and creating an enabling environment for the next generation,’ the White House said.

GNA

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