Capital Flight from Africa, 1970-2018: New Estimates with Updated Trade Misinvoicing Methodology

Capital Flight from Africa

PERI researchers Léonce Ndikumana and James Boyce present updated estimates of capital flight from 30 African countries over the period 1970-2018. Over this 49-year period, this group of countries lost a combined $2 trillion through capital flight. This far exceeds the $720 billion of external debt owed by these countries as of 2018, making them effectively ‘net creditors’ to the rest of the world. Capital flight persists as a major obstacle to development financing in Africa. The paper calls for urgent action to stem the financial hemorrhage and to devise strategies to repatriate stolen assets stashed offshore.

Abstract

This report presents updated estimates of capital flight from 30 African countries over the period 1970-2018. Over this 49-year time-frame, this group of countries lost a combined $2 trillion through capital flight. Net misinvoicing of exports and imports contributed $588 billion to total capital flight. It is estimated that the stock of offshore wealth accumulated from capital flight reached $2.4 trillion in 2018, assuming that capital outflows earned the equivalent of the modest US Treasury Bill rate in destination territories. This far exceeds the $720 billion of external debt owed by this group of countries as of 2018. In this sense, these African countries are a ‘net creditor’ to the rest of the world. The evidence suggests that capital flight remains a major obstacle to development financing in Africa, and it calls for urgent action to stem the financial hemorrhage and to devise strategies to repatriate stolen assets stashed offshore.

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