Capital Flight from Africa: Channels, Actors and Enablers
On the Trail of Capital Flight from Africa: The Takers and the Enablers
Edited by Léonce Ndikumana and James K. Boyce
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On the Trail of Capital Flight from Africa investigates the dynamics of capital flight from Angola, Côte d'Ivoire, and South Africa, countries that have witnessed large-scale illicit financial outflows in recent decades. Quantitative, qualitative, and institutional analysis for each country is used to examine the modus operandi of capital flight; that is, the 'who', 'how', and 'where' dimensions of the phenomenon. 'Who' refers to major domestic and foreign players; 'how' refers to mechanisms of capital acquisition, transfer, and concealment; and 'where' refers to the destinations of capital flight and the transactions involved. The evidence reveals a complex network of actors and enablers involved in orchestrating and facilitating capital flight and the accumulation of private wealth in offshore secrecy jurisdictions. This underscores the reality that capital flight is a global phenomenon, and that measures to curtail it are a shared responsibility for Africa and the global community. Addressing the problem of capital flight and related issues such as trade misinvoicing, money laundering, tax evasion, and theft of public assets by political and economic elites will require national and global efforts with a high level of coordination.
FRENCH EDITION:
La Fuite des Capitaux d’Afrique: Les Pilleurs et les Facilitateurs
Edited by Léonce Ndikumana and James K. Boyce (published by Amalion, 2024)
La Fuite des Capitaux d’Afrique : Les Pilleurs et les Facilitateurs offre une analyse de la dynamique de la fuite des capitaux basée sur l’investigation des cas d’Angola, de Côte d’Ivoire et d’Afrique du Sud, pays qui ont connu des fuites de capitaux à grande échelle. Pour chacun de ces pays, une analyse quantitative, qualitative et institutionnelle est utilisée pour examiner le modus operandi de la fuite des capitaux. C’est-à-dire les principaux acteurs nationaux et étrangers qui sont impliqués; les mécanismes d’acquisition, de transfert et de dissimulation du capital; et les destinations de la fuite des capitaux. Les résultats de l’analyse révèlent un réseau complexe d’acteurs et de facilitateurs impliqués dans l’orchestration et la facilitation de la fuite des capitaux, et de l’accumulation de richesses privées dans les juridictions offshore de secret. L’analyse illustre le caractère mondial de la fuite des capitaux, et le fait que les mesures visant à réduire ces flux sont une responsabilité partagée pour l’Afrique et la communauté mondiale. Des efforts nationaux et internationaux proprement coordonnées seront nécessaires pour résoudre le problème de la fuite des capitaux et les questions connexes telles que la fausse facturation commerciale, le blanchiment d’argent, l’évasion fiscale et le vol des biens publics par les élites politiques et économiques.
Working Paper Series
Read: International Trade and Capital Flight from Africa: Challenges for Governance
Read: Magnitudes and Mechanisms of Capital Flight from Angola, Côte d’Ivoire and South Africa
Read: Oil and Capital Flight: The Case of Angola
Read: Capital Flight from South Africa: A Case Study
Read: Bitter Chocolate: Wealth Extraction from Côte d'Ivoire
Read French version of Bitter Chocolate
Press and Study Impact
Global Development Policy Center Webinar Summary: On the Trail of Capital Flight
Preface to the Working Paper Series on Capital Flight from Africa
Capital flight constitutes a major constraint to Africa’s efforts to fill the large and growing financing gaps that hold back its progress towards achieving sustainable development goals. The mounting evidence on the unrecorded outflows of capital from Africa has spurred calls for strategies to curb the financial hemorrhage that is afflicting the continent.
The existing evidence is still inadequate, however, on four fronts. First, the quantitative evidence is predominantly aggregate and does not furnish adequate country-specific information on the mechanisms of capital flight, its institutional contexts, and the role of domestic and foreign players in facilitating it. Second, the literature has not paid adequate attention to the destinations of wealth accumulated through capital flight and the roles of the banking sector and public institutions in destination jurisdictions. Third, much of the literature conflates the capital flight with the broader concept of illicit financial flows. While all capital flight is illicit owing to its unrecorded transfer – and often, as well, by virtue of the illegal origins of the wealth, and the failure to declare the assets and pay tax on the associated income – not all illicit financial flows are capital flight; for example, payments for smuggled imports are an illicit flow but distinct from capital flight. Fourth, the existing literature has not sufficiently explored the two-way relationship between capital flight and governance in national and international institutions.
To help fill these gaps in the literature, the African Development Policy Program at the Political Economy Research Institute has initiated detailed analyses in a project generously supported by the Open Society Foundations and the Friedrich Ebert Foundation. This Working Paper series presents the project’s outputs. Our goal in issuing these reports is to engender informed public participation in decision making on financial regulation. Key findings will be distilled and published in the coming year in an edited volume that is forthcoming from Oxford University Press.
Léonce Ndikumana
Director, African Development Policy Program
University of Massachusetts Amherst
