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 people of Ethiopia are being bled dry. No matter how hard they try to fight their way out of absolute destitution and poverty, they will be swimming upstream against the current of illicit capital leakage. The global shadow financial system happily absorbs money that corrupt public officials, tax evaders, and abusive multi-national corporations siphon away from the Ethiopian people.
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.