According to estimates made yesterday, the annual cost of corruption and illegal cash flows in Nigeria and other African nations is $88.6 billion.
The estimate of capital flight, provided by Lamin Barrow, the director general of the African Development Bank Group (Nigeria), is a significant source of capital flight and revenue drain on the continent, eroding prospects for attaining the Agenda 2063 goals of the African Union and the Sustainable Development Goals (SDGs).
Barrow stated that the financial crisis, which is exacerbated by a lack of accountability and transparency, creates a vicious cycle of a fiscal sinkhole in Africa’s public resources. This was stated during an executive training programme on “Enhancing Accountability, Transparency and Curbing Corruption and Illicit Financial Flows in Africa” in Abuja.
He cited the United Nations Conference on Trade and Development’s (UNCTAD) Economic Development in Africa Report 2020, which stated that corporate tax accounts for one-sixth of all government revenue on the continent and that tax evasion costs the continent $6.7 billion.
“The report estimated that between 2013 and 2015, capital flight from Africa was worth $88.6 billion annually, or 3.7% of Africa's GDP. In contrast, during the same period, total official development assistance (ODA) and foreign direct investment (FDI) were $48 billion and $59 billion, respectively.”
“The research goes on to say that between 2000 and 2015, there was an estimated $836 billion in illicit capital flight from Africa, surpassing the continent’s estimated $770 billion in total external debt in 2018. Thus, Africa is a ‘net creditor to the world," according to Barrow.
However, he continued, governments are compelled to borrow more money as a result of corruption and illicit financial flows (IFFs), which increases the risk of theft because of inadequate public financial management systems.
Accordingly, “IFFs and corruption exacerbate the debt vulnerabilities observed in many African countries," the speaker stated. Speaking to public finance managers undergoing training via the Public Finance Management Academy for Africa (PFMA), Barrow stated that effective public financial management and collaboration among all stakeholders will be necessary to surmount these obstacles.
According to him, governments have to make sure that institutions that deal with revenue mobilization, accountability, transparency, anti-corruption, and anti-IFFs have enough resources to carry off their duties.
In order to do this, it is important to preserve the voice and watchdog function of the media and civil society while bolstering the authority and independence of the Supreme Audit Institutions and legislative oversight committees.
The African Development Bank (AfDB) launched the executive training, which is the final module before the first cohort of the Public Finance Management Academy for Africa (PFMA) Public Finance Management Executive Training Series graduates.
