Webinar Summary – On the Trail of Capital Flight from Africa: The Takers and the Enablers

By Oyintarelado (Tarela) Moses

On October 20, 2022, the Boston University Global Development Policy Center hosted Léonce Ndikumana to discuss his new book ‘On the Trail of Capital Flight from Africa: The Takers and the Enablers.’ Through qualitative, quantitative and institutional analysis, the book edited by Ndikumana and James K. Boyce investigates the dynamics of capital flight, known as the illicit financial outflows from a country. The book reveals the complex network of domestic and international actors involved in capital flight in Angola, Côte d’Ivoire and South Africa, and the resulting accumulation of private wealth in offshore tax havens. 

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But Ndikumana also convincingly showed that donors and destination countries need to pay attention because capital flight is detracting from development finance. African countries receive financial inflows through aid, debt, exports and foreign direct investment to pay for goods, services and external liabilities. However, its citizens lose out on resources for public goods when some of these funds are smuggled out without record, as is the case when a country cannot account for the use of all the financial inflows. Sometimes, governments inflate project costs so they can borrow more and siphon off money to offshore accounts. Some foreign banks enable such actions by accepting deposits without the required due diligence, accountants and lawyers may help domestic actors fabricate companies and some auditing firms facilitate these outflows. Altogether, these actions undermine the effectiveness of aid and other financial inflows by draining a country’s resources for development. 

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During the Q&A section of the webinar, Ndikumana underscored the importance of holding both initiators and enablers accountable for their actions in capital flight. Transparent, accurate reporting of Africa’s financial inflows and outflows is crucial for improving the exchange of information between Africa and destination countries. African countries are still important vectors for distributing development finance, but increased transparency and greater cooperation with the private sector is needed to address capital flight. Using initiatives such as the Extractive Industries Transparency Initiative (EITI) help record accurately the money from exports and tax payments. Finally, he emphasized the vital role of civil society in advocating for increased government capacity to address capital flight in Africa. 

In all, the book offers a comprehensive picture of the complexity of Africa’s financial inflows and outflows. Its findings advance the understanding of capital flight theoretically and empirically. As African countries continue to encounter the vast gaps in finance for infrastructure and climate policy, these solutions for addressing capital flight provide a new avenue to boost development finance in the region. 

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