Illicit Financial Flows Outpace Development in Africa, OECD Says

Through medication and narcotics smuggling, ivory and people trafficking, oil theft and piracy, Africa is, by conservative estimates, losing about $50 billion a year in illicit financial flows — more, in fact, than it receives in official development assistance. 

A report by the Paris-based Organization for Economic Cooperation and Development offers a bigger look at the illegal economy behind the losses and how African and richer nations can fight it.

The OECD report zooms in on West Africa, and one sector in particular stands out. Catherine Anderson, who heads governance issues as the OECD, said 80 percent of illicit financial flows from West Africa are generated from the theft of natural resouces, principally oil.

But West African countries aren’t the only ones losing out from illicit flows, Anderson said. So are developed nations. Migrant trafficking, a hot-button issue in Europe, is a case in point.

“One of our case studies is on al-Qaida in the Islamic Maghreb, which is benefiting from the kidnap-for-ransom activities,” she said. “They are interdicting the trade and passage of goods across the Sahel, levying protection fees and revenues from the population. These have significant implications, not just for West African populations but for OECD countries, for Europe, in terms of insecurity and instability.”

She said illegal resource flows need to be tackled holistically — not only by the countries of origin, but also by those where the finances are transiting, and those where they finally end up, including developed countries. Doing so can be particularly tricky in West Africa, where a huge informal economy blurs the boundary of what is legal and what isn’t.

Ambassador Según Apata of Nigeria is a member of a U.N. high-level panel looking into illicit financial flows from Africa. He said some African governments are beginning to tackle the problem, but they don’t always have the capacity to do so.

“We have not made giant strides yet,” Apata said. “We are still at the elementary, at the mundane level of implementation.”

Apata said that if the $50 billion in losses from illegal activities were channeled into development in West Africa, it could help check the illegal migration that European countries worry about.
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