Defining, estimating and disseminating statistics on illicit financial flows in Africa

Africa is estimated to lose substantial resources through illicit financial flows (IFFs). These flows originate from several sources: revenues from illegal activities, tax avoidance, abusive profit-shifting, trade mis-invoicing, corruption, and others.

IFFs divert resources from social development and raise serious problems for financing development in Africa. These risks have been recognized in the 2030 Agenda for Sustainable Development, specifically in target 16.4 of the Sustainable Development Goals (SDGs).

The Addis Ababa Action Agenda on financing for development also calls for redoubling efforts to substantially reduce IFFs by 2030. The Action Agenda invites the "appropriate international institutions and regional organizations to publish estimates of the volume and composition of illicit financial flows." However, there is no globally-accepted methodology to monitor IFFs. The lack of reliable, objective evidence can hinder policy interventions and undermine possibilities to tackle the problem.

This project, implemented by UNCTAD and ECA in collaboration with UNODC and ECLAC, will focus on developing a statistical methodology to estimate IFFs with an aim to:

Gain knowledge on the size of IFFs and their origins.
Provide evidence for a targeted and effective policy response.
Improve the participating countries' capacity to measure IFFs over time, and monitor the impact of policies put in place to reduce these flows.

The statistical methodology and the insights from its pilot testing in nine African countries will be published as part of the project. The pilot testing will provide feedback to the development of a globally-agreed methodology to measure IFFs and the related SDG indicator 16.4.1, for which UNCTAD and UNODC are custodian agencies.

The policy implications will be discussed with experts and presented at intergovernmental platforms for policy action.

Objective

To strengthen statistical capacity of African governments and other stakeholders to define, measure and disseminate statistics on IFFs that would enhance the data infrastructure required for the 2030 Agenda for Sustainable Development, and support evidence-based policy recommendations in this area.

Link to the SDGs:

Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.

Target 16.4 - By 2030, significantly reduce illicit financial and arms flows, strengthen the recovery and return of stolen assets and combat all forms of organized crime.This includes the development of methodologies to measure the SDG indicator 16.4.1 "Total value of inward and outward illicit financial flows (in current United States dollars)".
Target 16.5 - Substantially reduce corruption and bribery in all their forms.

Strengthen the means of implementation and revitalize the global partnership for sustainable development.

Target 17.1 - Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection.

Planned activities:

Conduct research on methodological approaches to the measurement of IFFs.
Host international expert group meetings to discuss and agree on the concepts and methodologies for the measurement of IFFs.
Organize national workshops to discuss challenges, relevant types of IFFs and options to assess them at the national level.
Draft guidelines for the development, collection, harmonization and processing of data required for the measurement of IFFs.
Pilot test the agreed methodologies to measure IFFs in nine African countries, and refine the guidelines based on the results.
Organize workshops to build capacity for IFF data collection, compilation and dissemination, and to follow-up on the results achieved.
Share the findings and results at statistical and policy fora to promote the measurement of IFFs and evidence-based policy action in support of the 2030 Agenda, target 16.4.

The following is a playlist of nine videos on concepts related to tax and commercial IFFs, as well as crime related IFFs.

Downloads:

Methodological guidelines to measure tax and commercial illicit financial flows - Methods for pilot testing and related documents.

UN project supports Egypt to measure illicit financial flows

29 Nov 2022

The country is striving to unlock more resources for sustainable development by tracking and tackling illicit financial flows.

Counting the cost of illicit financial flows

14 Nov 2022

UNCTAD, UNODC and their partners have developed tools and methods that are supporting 22 countries in Africa, Asia and Latin America track selected illicit financial flows.

Testing new guidelines for measuring illicit financial flows in Africa and Asia

19 Jan 2022

UNCTAD and UN regional commissions are piloting new methods for tallying the cross-border movement of money that is illicit in origin, transfer or use.

Tackling the data gap in the fight against illicit financial flows

6 Apr 2021

UNCTAD is working with national statistical offices to better measure the scale of illegal movements of money across borders to inform firmer policy action.

UNCTAD, UNECA help African countries measure illicit financial flows

16 Feb 2021

The project and related guidelines will support interested African countries to assess the types of illicit financial flows relevant to their national contexts.

UN agencies finalize a framework to measure illicit financial flows

21 Dec 2020

Pilot projects are using the new framework to calculate the costs of illicit trade and business practices in Afghanistan, Colombia, Ecuador, Mexico, Nigeria, Panama and Peru.

Export under invoicing in Africa concentrated in high-value, low-weight commodities, study shows

12 Nov 2020

Gold accounts for 77% of the $40 billion worth of under invoiced extractive commodity exports from Africa, according to UNCTAD research. Diamonds represent 12% and platinum 6%.

UNCTAD and partners make progress on measuring illicit financial flows

31 Oct 2019

Quantifying the total value of illicit flows that are draining resources for development is a key step in tackling them.

Introducing the challenges of measuring Illicit Financial Flows to the International Statistical Community

2 Oct 2019

At the World Statistics Congress in Kuala Lumpur, UNCTAD held a session entitled “Multinational profit shifting and illicit financial flows – can we measure them?”.