Illicit Financial Flows to South Sudan: Role of Kenya and Uganda

The Nairobi-based Institute of Economic Affairs published in November 2018 a paper titled "Why Reduction of Illicit Financial Flows that Fuels South Sudan's War Economy Is in Kenya and Uganda's Interest."

The paper traces the institutional weaknesses that facilitate the illegal flow of funds belonging to South Sudan and how those funds may be channeled back to escalate civil conflict thereby undermining state sovereignty and opportunities for genuine democratic development.

The paper concludes that the governments of Uganda and Kenya must acknowledge that they undercut their own diplomatic initiatives by failing to constrain the beneficiaries of the funds and property stolen from South Sudan. Without action against illicit financial flows, Kenya and Uganda will stand accused of complicity in the continued poverty and suffering of the South Sudanese people.

Illicit Financial Flows to and from African Countries

Global Financial Integrity published on 28 January 2019 its report titled "Illicit Financial Flows to and from 148 Developing Countries: 2006-2015."

The report provides country-level estimates of the illicit flows of money into and out of 148 developing and emerging market nations as a result of their trade in goods and services with advanced economies, as classified by the International Monetary Fund. The flows, referred to as illicit financial flows (IFFs) are estimated over the years from 2006 to 2015.

Research for 2015 using IMF Direction of Trade Statistics dataset show that the top quintile (30) of countries, ranked by dollar value of illicit outflows included the following African countries: South Africa ($10.2 billion) and Nigeria ($8.3 billion). The top quintile (30) of countries, ranked by illicit outflows as a percentage of total trade with advanced economies included the following African countries: Mozambique (48.1 percent), Malawi (44.1 percent), Zambia (43 percent), and Namibia (38.7 percent). The top 30 countries ranked by dollar value of illicit inflows included Morocco ($3.9 billion).

Using a Comtrade dataset from the United Nations produced somewhat different results.

External Financial Flows and Tax Revenues for Africa

The African Development Bank has just released its African Economic Outlook for 2015.  Chapter 2 titled "External Financial Flows and Tax Revenues for Africa" reports that private external flows in the form of investment and remittances now drive growth in external finance.  Foreign investments are expected to reach $73.5 billion in 2015.  Foreign direct investment is moving away from mineral resources and into consumer goods and services.  African sovereign borrowing is rocketing.  Remittances have increased six-fold since 2000 and are projected to reach $64.6 billion in 2015.  Official development assistance will decline in 2015 to $54.9 billion.