Duarte:focus on Institutions for Development

Abstract

The wide spread of the estimated cost of illicit financial flows is an illustration of just how difficult it is to track and identify where money escapes, but even at its lower bound, the number is the same order of magnitude as the foreign aid that flows into the continent. Slowing, stopping and reversing these illegal flows requires convincing and coordinating a complex mix of international, local and private sector actors whose interests are not always aligned. The structure of many African economies, where natural resources are extracted and shipped out with minimal processing, lends itself well to systemic abuse Capital that leaves the continent illegally tends to end up in the international financial system, usually in banking centres known for their secrecy. There has been, however, a recent shift towards pressuring these havens to open up to scrutiny. The G8, G20 and Organisation of Economic Cooperation and Development have all made commitments to try to reduce the impact of illicit financial flows and tax evasion.