I’ve been reading Treasure Islands (‘Treasure Islands - Tax Havens and the Men who Stole the World’, Nicholas Shaxson, 2016 Edition) which tells a disturbing story about the UK’s involvement in tax havens – and also the extent to which so many other countries have joined in. This in the context of needing more and more finance for the ‘capital intensive’ watsan sector. So disturbing to read (p157) that “between 1970 and 2008, [Global Financial Integrity] concluded 'Total illicit financial outflows from Africa, conservatively estimated, were approximately $854 billion. Total illicit flows may be as high as $1.8 trillion'.

And that (p158) “Developing countries lost up to a trillion dollars in illicit financial flows just in 2006 - that is ten dollars out for every dollar of foreign aid flowing in.” And “another study using different methodologies to examine capital flight from 40 African countries from 1970 to 2004. Its conclusions are similarly striking: 'Real capital flight over the 35 year period amounted to about $420 billion (in 2004 prices) for the 40 countries as a whole. Including imputed interest earnings ... the accumulated stock of capital flight was about $607 billion as of end 2004.”

So based on the OECD numbers that Official Development Assistance to Africa from 1970 to 2009 was $106.1 billion, accepting the imperfect overlap on dates, these numbers indeed agree that capital outflows were between 8.0 times and 5.7 times ODA inputs – that is a bit less than the 10 times Shaxson reported for 2006 but still a staggering number over the forty years.

No wonder watsan has a challenge financing its capital-intensive service. Perhaps, noting the China example (see blogpost), watsan service delivery in Africa could have been ahead of the GDP per person curve if only the ‘elite’ and the elite’s ‘facilitators/agents’ in rich countries had not removed so much of the capital to their mutual benefit.

http://www.oecd.org/dac/financing-sustainable-development/development-finance-data/Africa-Development-Aid-at-a-Glance-2018.pdf