Ethiopia Lost US$11.7 Billion in Illegal Capital Flight

Illicit Financial Outflows from Ethiopia Nearly Doubled from 2000 through 2009 to US$3.26 Bln, Says New Global Financial Integrity Report.

The Wall Street Journal

By Christopher Matthews

Ethiopia lost $11.7 billion to outflows of ill-gotten gains between 2000 and 2009, according to a coming report by Global Financial Integrity.

That’s a lot of money to lose to corruption for a country that has a per-capita GDP of just $365. In 2009, illicit money leaving the country totaled $3.26 billion, double the amount in each of the two previous years. The capital flight is also disturbing because the country received $829 million in development aid in 2008.

According to GFI economist Sarah Freitas, who co-authored the report, corruption, kickbacks and bribery accounted for the vast majority of the increase in illicit outflows.

Read more at the Wall Street Journal.

Related:
Illegal Ethiopian Capital Flight Skyrocketed In 2009 To US$3.26 Billion

Source: Global Financial Integrity

December 5, 2011

By Clark Gascoigne, +1 202-293-0740 ext.222

WASHINGTON, DC – Corruption, kickbacks and bribery are on the rise in Ethiopia, according to a forthcoming report from Global Financial Integrity, a Washington-based research and advocacy organization. According to the study, illicit financial flows out of the African nation nearly doubled to US$3.26 Billion in 2009 over the previous year, with corruption, kickbacks and bribery accounting for the vast majority of that increase.

GFI Economist Sarah Freitas, who co-authored the upcoming report with GFI Lead Economist Dev Kar, revealed the data in a blog post today on the website of the Task Force on Financial Integrity & Economic Development (financialtaskforce.org).

Ms. Freitas wrote: “An upcoming report by Global Financial Integrity finds that Ethiopia, which has a per-capita GDP of just US$365, lost US$11.7 billion to illicit financial outflows between 2000 and 2009. More worrying is that the study shows Ethiopia’s losses due to illicit capital flows are on the rise. In 2009, illicit money leaving the economy totaled US$3.26 billion, which is double the amount in each of the two previous years.”

The report, titled Illicit Financial Flows from Developing Countries over the Decade Ending 2009, shows that the vast majority of the rise in illicit financial flows is a result of increased corruption, kickbacks, and bribery while the remainder stems from trade mispricing.

Ethiopia is one of the poorest countries on earth. Plagued by famine, war, and political oppression, 38.9% of Ethiopians live in poverty, and life expectancy in 2009 was just 58 years. In 2008, Ethiopia received US$829 million in official development assistance, but this was swamped by the massive illicit outflows. The scope of Ethiopia’s capital flight is so severe that our conservative US$3.26 billion estimate greatly exceeds the US$2 billion value of Ethiopia’s total exports in 2009.

The full article can be read here.

Ethiopia is not the only country to be highlighted in the organization’s upcoming study. Indeed, in a similar blog post published last week, Ms. Freitas revealed that the report, titled Illicit Financial Flows from Developing Countries over the Decade Ending 2009, found that Syria had lost US$23.6 billion in illegal capital flight from 2000-2009. The report is the annual update to GFI’s previous studies measuring the illicit financial flows out of 160 different developing nations. This will be the first of GFI’s studies to include data for the year 2009.
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Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system.

For additional information please visit www.gfintegrity.org.