* AfDB says resource drain "holding back Africa's lift-off"
* Illicit transfers behind most of $1.4 trillion outflow
* Urges strengthening of tax, regulation, customs systems
By Pascal Fletcher
JOHANNESBURG, May 10 Africa's economic
development is being held back by a "hemorrhage" of illicit
financial flows, which may be getting worse, the African
Development Bank said on Friday, calling for reforms to stem the
A draft report to be presented at the AfDB's annual meeting
in Morocco later this month shows net resource outflows from
Africa totalling up to $1.4 trillion over the 30-year period to
2009, far exceeding inflows to the continent.
Illicit financial flows were "the main driving force" behind
$1.2-1.3 trillion of the three-decade net drain, it said.
This is about four times Africa's current external debt and
almost equivalent to its current GDP.
"The trend is continuing, it could even be increasing," AfDB
Chief Economist Mthuli Ncube said in a phone interview. Figures
for the period since 2009 were not yet fully available.
"We need to block the leakage ... It is holding back
Africa's lift-off," he added.
The report, by the AfDB and the Washington-based advocacy
group Global Financial Integrity and made available to Reuters,
called for anti-corruption agencies and laws, and mechanisms to
combat money-laundering, to be reinforced and for government
budget processes to be made more transparent.
The illicit outflows between 1980 and 2009 were often linked
to the extraction of oil and minerals and covered criminal
activities like money-laundering, tax evasion and transfers from
corruption, kickbacks and contraband, the report said.
But they also included what the report called "mispricing of
trade" - for example, opaque business deals negotiated with
local authorities which flout or ignore existing legislation.
The study on illicit transfers comes as the world's least
developed continent experiences an economic growth surge,
outpacing global averages. The World Bank and IMF see
Sub-Saharan Africa's GDP accelerating to over 5 percent in
coming years, driven by investment and high commodity prices.
"This is the poorest region in the world and that is why we
are shining a torch on this ... Africa needs these resources
more than any other region," Ncube said, adding, "There is a lot
to lose if nothing is done."