Counting the Cost: defining, estimating and disseminating statistics on illicit financial flows in Africa

Abstract

Illicit financial flows (IFFs) have a substantial and crippling effect on societies and economies, not only on the African continent, but also around the world. The COVID-19 pandemic, the war in Ukraine and the increasing costs of climate change and environmental challenges have had a particularly devastating impact on developing economies, highlighting the critical need for addressing the financing gap. IFFs drain resources that would be needed to fulfil human rights and pursue sustainable development. Domestic resource mobilisation, assets recovery and curbing IFFs is more critical than ever. Illegal practices such as trade misinvoicing, tax evasion and corruption, as well as some legal practices, such as tax avoidance are often used to divert funds earmarked for social development to tax and financial havens.