Africa has ‘lost $1.7 trillion’ in 50 years – The Cable

Claver Gatete, Rwanda’s minister of finance and economic planning, has called on African leaders to tackle illicit financial flows, alleging that the continent had lost over $1.7 trillion to the menace in the last 50 years.

According to a statement by the African Export-Import Bank (Afreximbank), Gatete made the call while speaking at the third annual customer due diligence and corporate governance forum which the bank organised in Rwanda.

Gatete said Africa was losing an estimated $50 billion annually to illicit financial flows.

He said this should be a source of concern to the continent, “especially as access to finance and capital was a key constraint to growth and economic development”.

“That amount roughly equalled all the official development assistance it received during the same period,” Gatete said.

“The illicit activities have significant implications for growth and economic development and for the financial soundness of banks and corporate entities.

“The activities undercut legitimate economic activities, discouraged investment, bred suspicion and undermined government legitimacy.”

He urged African financial institutions, regulatory bodies and governments to work together to establish mechanisms that would ensure a healthier financial landscape.

George Elombi, Afreximbank executive vice-president, corporate governance and legal services, said the high cost of conducting customer due diligence had adversely affected the stability of the African financial sector and the productivity of corporate entities.

“Financial crimes, compounded by weak corporate governance capacity, have the potential to derail legitimate economic activity,” Elombi said.

“Besides, it slows down the development of financial markets essential for optimal allocation of capital to support the structural transformation of resource-constrained African economies.”