Financial Transparency Coalition

WASHINGTON DC – Illicit financial flows due to crime, corruption, and tax evasion cost Zambia $8.8 billion from 2001-2010, finds a forthcoming report from Global Financial Integrity (GFI).

In our newest report, Illicit Financial Flows from Developing Countries 2001-2010, we look at illicit financial flows--the proceeds of crime, corruption, and tax evasion--leaving the developing world. Illicit financial flows are a type of capital flight, and have been a persistent plague on the developing world for some time now. Our new report will be released on Tuesday morning. But for today, I want to focus more narrowly on Zambia, one of the poorest nations on earth and one of the clearest examples of the damage caused by both illicit and licit capital flight.

Latindadd and other civil society organisations recently sent their contributions to the UK parliamentary inquiry into tax in developing countries. In its call, the International Development Committee of the UK parliament highlighted that “developing countries lose an estimated $ 160 billion each year through tax avoidance by multinational companies (including those based in the UK)” and the important role of the extractive industries, “where payments to governments are often not disclosed and may not contribute to development or poverty reduction.”

Poverty ain’t what it used to be, nor for that matter where it used to be either. As the nature and location of poverty continues to change, the illicit financial flows agenda becomes all the more important for development. Historically, the vast majority of people living on less than a dollar a day (or $1.25, where the World Bank’s line is now drawn) did so in low-income countries (LICs); that is, in countries with per capita gross national incomes less than $1005. So: income-poor people lived in income-poor countries. Simples. And true: twenty years ago, 93% of those in...