Africa loses a staggering amount of money a year to illicit capital flight with minerals and of a fortune almost $88.6 billion annually in outflows. According to the latest UN Conference on Trade and Development’s report, the amount lost annually through illicit capital flight is equivalent to 3.7% of the continent’s economic output.

The report by the UN Conference on Trade and Development’s (UNCTAD) states that curbing illicit capital flight could generate enough capital by 2030 to finance almost 50% of the $2.4 trillion needed by sub-Saharan African countries for much-needed climate change adaptation and mitigation measures.

The report also estimates the total illicit capital flight has surpassed what the continent receives in foreign aid annually. Cumulatively, the total IFFs reached $836 billion in the first 15 years of this century representing a major drain on capital revenue in Africa which is derailing its efforts of achieving Sustainable Development Goals.

There’s nothing entirely new about these shocking revelations. Such leakages of vast amounts have been going on for decades depriving African countries of the much-needed resources to turn around their economies which have been surviving on shoestring budgets. But perhaps it’s only during troubling COVID-19 times like these, that the scale and its true impact has become apparent especially when countries that have been overwhelmingly reliant on donor aid, are on the brink of collapse. The post-COVID-19 recovery process has become a painstaking undertaking at a time when countries are reeling from the economic downturn caused by COVID-19 disruptions. Illicit financial flows rob Africa and its people of their prospects, undermining their initiative and efforts to economically emancipate themselves from the bondage of foreign Aid. It also injures transparency and accountability thus eroding trust in African institutions.

 The UNCTAD report calls for increased transparency and cooperation between tax administrations globally and within the continent to tackle tax evasion and tax avoidance. It also urges the African Tax Administration Forum to become a platform for regional cooperation among African countries. Illicit capital flight and massive lost revenue from tax avoidance and evasion have been a long-running phenomenon and a major source of lost income for African treasuries with some conservative estimates putting the figures lost to tax havens at $9.6 billion.

The report also finds that in African countries with high levels of lost income from Illicit Financial Flows, governments spend 25% less than countries with low IFFs on health and 58% less on education. The damning report findings come at a time when the African Union (AU) has begun to develop its guidelines on Initial Financial Flows. The report urges the continent’s governments to define an agenda for Africa in the reform of the international taxation regimes. A series of bilateral double tax treaties are currently up for re-negotiation between European and African countries, and campaigners see this as an opportunity to redraw treaties and make reforms that will ensure that African governments can tax firms for activities taking place in their countries.