Magnitude and Mechanisms of Capital Flight from Angola, Côte d’Ivoire and South Africa

Abstract

This paper presents an updated methodology for estimation of capital flight, which is applied to the cases of Angola, Côte d’Ivoire and South Africa. The results indicate that the three countries have experienced substantial capital flight over the past four decades, amounting to $60 billion in constant 2015 dollars for Angola (over 1986-2015), $32 billion for Côte d’Ivoire (over 1970-2015), and $198 billion for South Africa (over 1970-2015). An important mechanism of capital flight is misinvoicing of exports and imports, especially in primary commodities. The fact that these outflows have persisted over a long period indicates that they are driven by fundamental structural and institutional factors pertaining to both the source countries and the global financial system. These outflows have led to the accumulation of massive offshore wealth belonging to the economic and political elites from these countries, even as their populations continue to face deprivation in access to basic services. Capital flight is clearly a major obstacle to development financing that needs to be tackled through coordinated strategies at national and international level.

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