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One of the most shocking figures I have come across recently shows that Ethiopia loses over USD 16 billion in illicit financial flow. This figure is reveled in a report the United Nations Economic Commission for Africa (UNECA) released last week.
According to another data from Global Humanitarian Assistance, Ethiopia received a total of USD 3.2 billion in assistance back in 2012. This has been a clear indicator for me that there are so many wrong things with this world, and the data has made it clear that there always are superiors and inferiors.
Africa has never really been poor. Sure, the continent has gone through circumstances such as colonization, exploitation, as well as slavery. We have been howling about that for years, trying to make ourselves feel better about being the subject of every poverty joke. The continent has been trying to change in some ways; moving on from feeling sorry for itself to taking charge of its’ fate. Yes, we are always hearing about the growth, how incredibly fast we are going and how we will not be starving anymore. But Africa remains the highest aid recipient in the world, and many still accredit aid to solving many grave issues the continent has been facing.
The incredible amount of illicit financial flow from Africa is estimated to be the equivalent of, if not greater than, the aid the continent has been receiving. According to the UNEAC report, this has been the case for many years and it looks like it might be the case for years to come.
Those that are being highly affected by money laundering, alike many other known misfortunate episodes of collecting the odds, are the poor. Illicit financial flow mostly involves cash made form drug sale, illegal arms deal, human trafficking and corruption. These issues are most dangerous to the poor and vulnerable section of the society. When we talk about poor and vulnerable, we are talking about a very large portion of the continent’s population.
Besides the huge economic impact, illicit cash flow also facilitates organized crimes, creates a safe haven for corruption to blossom, undermines governance, and decreases tax revenue.
Every dollar that leaves a country through illicit cash flow ultimately ends up in banks in the developed countries such as the US and UK as well as the famous haven for illicit cash deposit, Switzerland. According to some reports, about 45 percent of illicit money flow end up in offshore financial centers and 55 percent in developed countries.
Some studies suggest that the fact that the capital flight ends up in financial institutions of developed countries is no coincidence. Many developed countries actively make possible the theft of massive amounts of money from developing countries, and they reap huge amount of profits from the deposits.
So what can be done to stop this phenomenon that is slowly eating its way at the continent like cancer? Well, to begin with, there needs to be financial transparency. Policies should be enacted in order to detect and prevent cross-border tax evasion and anonymous covering companies need to be eliminated.
Good laws are always good to have but we need to make sure that those laws are enacted effectively. Laws such as anti-money laundering laws need to be tightened and practiced. Countries need to work on enforcing transparency in multinational corporations that are operating in their territories.
All the above can be done, and still things may not change as long as there is a corrupt governing body. That is why it is really important for leaders to join hands in the effort to stop illicit money flight from hindering the continent’s efforts towards achieving much more than it is now able to do.