$8 billion secretly taken out of Ethiopia – UN report

Over 8.3 billion dollars left Ethiopia in 18 years after 1990, an amount comprising an average 3.6pc of its GDP, a damning and first of its kind study, conducted by the United Nations Development Programme (UNDP), revealed.

This is part of the one trillion dollars that is believed to have left LDCs over the years covered by the study, an amount estimated to be 10 times larger than what these countries receive from rich countries in the form of official development assistance (ODA).

Ethiopia’s loss of over eight billion dollars in the past nearly two decades represents an average of 3.6pc of the amount it has received from its development partners during the same period, the study revealed.

Read full report (pdf)

……………..

Related report

48 Poorest Countries Lost US$197 Billion From 1990-2008; Serious Impediment to Development Efforts

Global Financial Integrity

Source: Financialtaskforce.org

ISTANBUL, Turkey – A United Nations Development Program (UNDP) commissioned report from Global Financial Integrity (GFI) on illicit financial flows from the Least Developed Countries (LDCs) was presented for discussion yesterday at the United Nations IV Conference on Least Developed Countries hosted by the Republic of Turkey.

Written by GFI Lead Economist Dev Kar, the report, Illicit Financial Flows from the Least Developed Countries: 1990-2008 (PDF | 1.75 MB), examines how structural characteristics of Least Developed Countries could be facilitating the cross-border transfer of illicit funds, discusses methodological issues underlying estimates of illicit flows, presents an analysis of the magnitude of such flows, and makes policy recommendations for the curtailment of these illicit flows.

In her opening remarks for the UNDP Conference yesterday, UNDP Administrator Helen Clark said, “Illicit flows seriously impede LDCs’ efforts to raise resources for social and economic development. These flows are often absorbed into banks, tax havens, and offshore financial centers in developed countries.”

Key findings of the report include:

  • Illicit flows divert resources needed for poverty alleviation and economic development.
  • Approximately US$197 billion flowed out of the 48 poorest developing countries and into mainly developed countries, on  a net basis over the period 1990-2008.
  • The top ten exporters of illicit capital account for 63 percent of total outflows, while the top 20 account for nearly 83 percent.
  • Based on available data, African LDCs accounted for 69 percent of total illicit flows, followed by Asia (29 percent) and Latin America (2 percent).
  • Trade mispricing accounts for the bulk (65-70 percent) of illicit outflows from LDCs, and the propensity for mispricing has increased along with increasing external trade.
  • The top exporters of illicit capital (cumulative outflows) are:
    1. Bangladesh, US$34.8 billion,
    2. Angola, US$34.0 billion
    3. Lesotho, US$16.8 billion
    4. Chad , US$15.4 billion
    5. Yemen, Republic of, US$12.0 billion
    6. Nepal , US$9.1 billion
    7. Uganda, US$8.8 billion
    8. Myanmar, US$8.5 billion
    9. Ethiopia, US$8.4 billion
    10. Zambia, US$6.8 billion
  • The factors that drive illicit flows from LDCs may be broadly classified into three categories—macroeconomic, structural, and governance-related. It is likely that structural and governance issues are driving the bulk of illicit outflows, but this needs to be examined on a case-by-case basis.

The GFI report on LDCs was commissioned by UNDP as a contribution to the United Nations IV High Level Conference on the Least Developed Countries in 2011.  Read the UNDP press release on the report here.

The full report is available for download on the UNDP website here (PDF | 1.75 MB).