Capital Flight from Sub-Saharan Africa
Sub-Saharan Africa experienced massive capital flight from 1970 to 2004, according to a new study by PERI researchers Léonce Ndikumana and James K. Boyce. They estimate the total volume of capital flight over this 35-year period at $420 billion (in 2004 dollars), a huge drain of resources in a region suffering from widespread poverty and crushing external debts. Statistical analysis shows that roughly 60 cents of every dollar borrowed abroad flowed back out as capital flight in the same year, suggesting that much of Africa’s capital flight was “debt-fueled.” Policies to recover looted wealth and encourage repatriation of externally held assets can help to secure resources for investment. In addition, the fact that much past external borrowing appears to have been diverted into private hands means that African governments have a strong case for repudiating “odious” debts, a strategy that could not only ease current debt burdens but also improve the quality of international lending in coming years.
"New Estimates of Capital Flight from Sub-Saharan African Countries:
Linkages with External Borrowing and Policy Options"
>> Read about the policy implications of this work on the Tax Justice Network