Posted on 21 Feb 2018
Africa is the world’s second fastest-growing economy after East Asia, and yet the
continent is also home to the largest share of people living in extreme poverty, in
countries with poor foundations for human development. Income inequality is rising, while underemployment and the lack of economic opportunities push some individuals to join criminal groups, gangs or rebel movements, reinforcing the links between inequality, criminal activity and violence.
The United Nations Economic Commission for Africa’s High Level Panel on Illicit Financial Flows has estimated that illicit financial flows (IFFs) from Africa could amount to as much as USD 50 billion (US dollars) per year. Although the figures on IFFs are heavily disputed, current analyses agree that IFFs exceed the amount of ODA provided to Africa.
Previous research has largely focused on capturing the volumes and sources of IFFs, and on identifying the commercial practices that contribute to them such as trade misinvoicing, tax evasion and avoidance, and transfer pricing.
This publication, written by a team from the Global Initiative against Transnational Organized Crime for the OECD, takes a different approach by seeking to build the evidence basis on criminal and illicit economies, the IFFs these economies generate, and their impact on development.
The report reviews diverse forms of economies prevalent in West Africa that are usually seen as criminal or illicit, organising them through a typology according
to a range of illegal activities, from natural resource crimes to illicit trade in normally legal goods.
This analysis leads to the following conclusions:
- criminal and illicit economies produce IFFs that undermine country capacities to finance their development;
- criminal economies and IFFs are a potent negative force that contribute to the degradation of livelihoods and ecosystems, undermine institutions, reinforce clientelist politics and enable impunity, in different ways across the region’s countries.