JOHANNESBURG- Africa loses nearly $1 billion every week through illicit financial flows out of the continent, and chiefly through transactions by multinational companies, an African Union agency said on Friday.
The New Partnership for Africa's Development (NEPAD), an African Union policy wing, said in a statement that the world's poorest region lost $900 billion in the illegal financial flows between 1970 and 2008.
Commercial transactions by multinationals accounted for 60 percent of the unlawful flows, followed by criminal activities such as trade in drugs, weapons and people at 35 percent. Bribery and embezzlement made up 5 percent.
Channels for the illegal flows were trade mispricing, investment-related transactions and offshore tax havens, a report commissioned by NEPAD and the UN's Economic Commission for Africa.
In an example of trade mispricing or misinvoicing would work, a company or official could say a piece of imported equipment costs $100 million when in fact it was exported with an $80 million price tag. The difference can be discreetly deposited in an offshore bank account.
"The development impact of these illicit flows has resulted in loss of tax revenues, damage to economic potential and weakening of governance," NEPAD said in a statement.
A report by the African Development Bank earlier this year showed that Africa was a net creditor to the world through illegal outflows worth between $597 billion and $1.4 trillion in the three decades to 2009.