$1t moved out of Africa illegally in 40 years – ECA

Carlos Lopez, the Executive Secretary of the United Nations Economic Commission for Africa, said on Wednesday in Addis Ababa, Ethiopia that over $1 trillion was illegally  siphoned out of Africa in the last 40 years.
Lopez said this at the opening of a two-day Senior Policy Seminar on Capital Flight and Tax Havens in sub-Saharan Africa.
The seminar was organised in collaboration with African Economic Research Consortium, with the theme: “Capital Flight from Africa.”
Lopez, therefore, called for measures to reverse the trend of illegal financial flows away from Africa.
He said Africa’s fiscal policy space had been compromised by the shortage of resources as capital flight was hidden from authorities, limiting Africa’s growth.
He said that researchers had indicated that the siphoned capital would have expanded the continent’s growth by 60 per cent, with a per capita growth of 15 per cent higher than what currently obtains.
According to Lopez, capital flight has impacted negatively on Africa’s saving ratios by denying local investors access to financial resources that could otherwise have been used be used to generate employment.
He said: “It is therefore critical that Africa addresses the issues of capital flight, not only to ensure that money made in Africa stays on the continent, but contributes to financing Africa’s transformation agenda.
“Africa must ensure an enabling business environment and attractive investment climate through proper sector management, policy coordination and effective service delivery, to attract more investments.”
Lopez said that for the fight to reduce the flight of funds and check direct losses of capital from the continent to be won, there was an urgent need to address the factors responsible for capital flight such as real exchange rate over-valuation.
The ECA boss also called for measures to promote African-owned private equity funds and other financial services to encourage capital to remain on the continent.
He observed that the continent’s private equity industry, valued at about $30 billion was thriving, with some 38 private equity funds invested in infrastructure including toll roads, dams and airports.
According to him, such investments outperformed listed stocks in the last four years.
Lopez said African bond issues had flourished in international market, through relatively new and limited countries, including Nigeria, Ethiopia, South Africa and Zambia.
He said that in such countries, infrastructure bonds were over-subscribed by about 15 times.
He said: “To make Africa’s bonds perform better, there is the need to ensure superior returns, low borrowing costs, appropriate fiscal incentives and credit guarantee facilities to protect against default.”
Nigeria’s IbI Ajayi of the University of Ibadan, is expected to chair a session on Illicit Financial Flows and Problems of the Net Resources Transfers from Africa, on Thursday.