Washington DC – The developing world saw a record $991 billion leave their countries due to corrupt practices and corporate tax evasion in 2012, according to a new report by Global Financial Integrity (GFI). GFI refers to this massive non-taxed loss as illicit financial flows and reports developing countries lost $6.6 trillion between 2003 and 2012. Such losses are growing at 9.4% per year. The report shows links between illicit flows and global poverty: developing and emerging countries lose 11 times more money to illicit flows than they receive in official aid.
“The poorest countries in the world are losing more money than they receive in aid,” noted Eric LeCompte, Executive Director of Jubilee USA, a religious anti-poverty group. “If we take Global Financial Integrity’s findings seriously, we can address extreme poverty in our lifetimes.”
According to the report, Sub-Saharan Africa loses more money than any other region to illicit financial flows. Sierra Leone, Liberia and Guinea saw nearly $1.4 billion leave to illicit flows in 2012, the year before the Ebola outbreak began. By contrast, the three countries spent less than $300 million on public health in that same year. In the latest United Nations Human Development rankings, Guinea is 179th out of 187 countries, Sierra Leone is 183rd and Liberia is 175th. The Philippines, still struggling to recover from Typhoon Haiyan, lost nearly $10 billion in illicit flows in 2012. The Philippines’ loss is more than 10 times the disaster relief aid it received.
“Countries need resources and if we curb these illicit practices, we can get the money where it’s needed most,” said LeCompte, an expert to UN groups that focus on these issues.
In August, the White House announced a new task force to address illicit flows in Africa during the US-Africa Summit in Washington. In 2013, G8 heads of state released a declaration to stop corporate tax avoidance and illicit flows at its yearly summit.
Read more about the connection between illicit flows and poverty.