Global economic inequality is widening at an alarming rate, with the 62 richest people owning the same as half the world’s poorest, according to an Oxfam Davos report.
The report calls for urgent action to deal with a growing trend of “extreme inequality crisis which threatens to undermine the progress made in tackling poverty during the last quarter of a century”.
More alarming for Africa is the illegal flight of capital. The capital is often held in tax havens in offshore accounts. According to Oxfam, “as much as 30 percent of all African financial wealth is estimated to be held offshore, costing an estimated $14 billion in lost tax revenues every year”.
Illicit financial flows have dire consequences on social development as the money stashed away in foreign bank accounts could be used in development initiatives. The money in lost tax revenues, “is enough money to pay for healthcare for mothers and children in Africa that could save 4 million children’s lives a year, and employ enough teachers to get every African child into school,” Oxfam says.
The continent has been reeling from the effects of illicit financial flows, affecting its growth and development. According to a report by the African Union’s (AU) panel on illicit financial flows headed by former South African President,Thabo Mbeki, the continent loses in excess of US$50 to US$60 billion every year through illicit outflows.
To effectively fight illegal financial flows from Africa, the panel advised stronger government and financial intelligence institutions.
Recently, it emerged that Switzerland was negotiating with Nigeria for the repatriation of $300m recovered from the family of former military leader Sani Abacha. Nigeria’s Foreign Minister Geoffrey Onyeama said about $700 million that Abacha hid in Swiss accounts has already been repatriated from the country.
Other African countries suffer the same fate, with billions of dollars lost in corrupt activities, which often involve political actors and multinational corporations.