Africa loses $700b to capital flight between 2000 and 2008 – AfDB
Africa deprived itself an amount of $700 billion due to capital flight in a period between 2000 and 2008, according to the 2012 African Economic Outlook (AEO) released May 28, 2012 by the African Development Bank (AfDB).
Capital flight is when assets or money rapidly flow out of a country, due to an event of economic consequence. Such events could be an increase in taxes on capital or capital holders or the government of the country defaulting on its debt that disturbs investors and causes them to lower their valuation of the assets in that country, or otherwise to lose confidence in its economic strength.
Eight African countries that suffered capital flight accounted for over $1 billion between the eight-year period.
The report argues that the struggle against capital flight could dramatically help Africa improve the quality of life of its people in particular to achieve the Millennium Development Goals (MDGs) as five of the eight countries were found in the tail of the ranking of human development in 2001 by the UN Development Development (UNDP) and are still struggling to raise funds to improve the living standards of their populations.
“If the flight capital had been reinvested in Africa with the same level of productivity that the investment actually made,” the report said, “the rate of poverty reduction would have increased 4 to 6 percentage points per year on average over the period 2000 to 2008,” the AEO emphasized.
The report indicated that international cooperation is essential to organize the repatriation of flight capital on the continent
The document also called on Africa to continue its efforts to improve domestic governance and eradicate practices that favour capital flight, but stressed the difficulties for the continent to repatriate its capital due to the reluctance of some countries to eradicate illicit financial transfers that benefit them.
The report estimated that the continent should take advantage of ”international consensus” in vogue as to the urgency of eradicating extreme poverty to increase the pressure for repatriation of flight capital
It was observed in the report that there has been an improved political climate and investment in Africa which is a sign that resources are used more judiciously than in the past.
By Ekow Quandzie
This will never stop since African leaders continue their greedy, corrupt, unaccountable ways. Lack of vision, irresponsible ways. A continent with huge resources yet ravage by poverty, few greedy rich individuals who don’t care about the rest of the population. Even common basics that are accessible in any part of the globe continue to be an issue.