Whether one looks at the figures in absolute or relative terms, the outflow of illicit financial flows (IFFs) from Africa is staggering. Ever since the landmark study by the African Development Bank(1) and Global Financial Integrity(2) described Africa as a net creditor to the world of some US$1.4 trillion between 1980-2009, studies have proliferated on the subject. The significance of these figures is that they demonstrate the extent to which international trade, indeed, integration into the global economy, is not proving to be a viable development option for the continent.

Illicit financial flows are monies illegally transferred off-shore (even if they result from legal transactions) in contravention of the laws of the country of origin. They range from simple private individual transfer of funds to private accounts abroad, to highly complex schemes involving sometimes criminal networks that set up multi-layered, multi-jurisdictional structures to hide ownership. Whilst criminal activities are often the most cited, it must be borne in mind that a staggering 52% of IFFs results from cross-border tax evasion. For instance, a study by AFRODAD(3) on IFFs in Zimbabwe showed that the country lost US$239 million in export under-invoicing, 44% of which resulted from its trade with Japan.