Illicit financial flows represent a formidable barrier to Africa’s inclusive growth and economic sovereignty. With this new report, Global Financial Integrity presents estimates for trade-related value gaps for all Sub-Saharan African nations from 2013 – 2022. This report highlights how over the last decade, vast sums have been illicitly drained from African economies largely through manipulated trade transactions at great cost to public welfare and development prospects. The Africa-specific data and analysis presented show both the concentration of this issue in certain countries, and its pervasive impact across the entire continent.
In effect, the continent has been a net creditor to the world, as cumulative illicit flight capital has exceeded Africa’s external debt stock in recent years. Moreover, these estimates are likely conservative given the hidden nature of illicit transactions; actual losses could be significantly higher.
Trade misinvoicing, the deliberate under- or over-statement of export and import values on invoices is widely recognized as a dominant channel for IFFs. Earlier studies suggest that trade mispricing alone may account for $30–$52 billion in financial flow value gaps in Africa’s trade each year, representing a large share (possibly over half) of total IFF volumes. High-value commodity exports (oil, gold, diamonds, etc.) are particularly vulnerable to misinvoicing, given the opacity in pricing and power imbalances between African exporters and the multinational buyers of these commodities.
Key Highlights
- Total value gaps in Sub-Saharan Africa are estimated at $152.9 billion in 2022
- South Africa had the highest cumulative (i.e. 10-year) dollar amount of value gaps with all trading partners during the period at $478.0 billion
- Gambia had the highest cumulative value gaps as a percentage of total trade with all trading partners during the period at 44%
- In trade transactions with Advanced Economies during the period, South Africa had the highest cumulative value gap in USD at $238.4 billion
- During the 10-year period, Gambia also had the highest geometric mean value gap with Advanced Economies as a percentage of total trade during the period at 37%
- No country in the region appears to have made much progress in limiting trade value gaps during the period
- As a region, Sub-Saharan nations averaged $112.97 Billion in trade value gaps during the 10-year period studied.