Remedy for a Trillion Dollar Problem?
Wednesday, June 17, 2015
Africa is bleeding.
But it’s not a physical wound, it’s a financial one, and it’s allowing more to leave in illicit flows — money that is illegally transferred, earned or utilized — than the amount received in development aid. Though the loss is coming out of Africa and other developing regions, the Band-Aid that could stop the bleeding is in the hands of a small group of rich countries.
A recent report from the African Union/Economic Commission for Africa High Level Panel on Illicit Financial Flows from Africa, chaired by former South African President Thabo Mbeki, estimates that the African continent alone is losing roughly $50 billion each year, 20 percent more than the amount of official development assistance coming in.
Whether a country needs more money for hospitals, roads or schools, one thing is clear: Governments could see a huge boost in revenue and economic growth if we can put an end to the billions leaving through tax evasion, profit shifting by multinational companies, and embezzlement of state funds.
Fortunately, we’re in a landmark year to take action.
The Millennium Development Goals are reaching their expiration, and the world is discussing the post-2015 framework for fighting poverty over the next 15 years. Alongside this agenda is a discussion on how to finance the effort. Preserving capital in developing countries — rather than exporting it to tax havens or bank accounts in rich countries — will allow us to make our own decisions about how to invest in the future.
A final session is underway now at the United Nations in preparation for July’s third International Financing for Development conference in Addis Ababa, Ethiopia. Putting an end to illicit financial flows and opening the door for financial transparency must be at the center of this discussion and the final decision that will emerge in Ethiopia next month.