Developing Countries Lost $16.3 Trillion

The GFI, which is the Centre for Applied Research at the Norwegian School of Economics, worked with a consortium of global economic experts in Brazil, India, and Nigeria to publish the report, representing huge social costs borne by the citizens of affected countries around the world.

Nigeria and other developing countries lost about $16.3 trillion between 1980 and 2012, a report by Global Financial Integrity (GFI) has revealed.

The report showed that developing countries have effectively served as net-creditors to the rest of the world with tax havens playing a major role in the flight of unrecorded capital.

The report said total developing country wealth in tax haven as at 2011, valued at about $4.4 trillion, worsened the level of inequality among citizens and undermined good governance and economic growth.

As of 2011, about $2.6 trillion of developing countries’ private wealth and over half of the $4.4 trillion of total assets were held in tax havens, the report stated.

“There is perhaps no greater driver of inequality within developing countries than the combination of illicit financial flows and offshore tax havens,” GFI President, Raymond Baker said.

Further details of the study showed that developing countries lost $13.4 trillion dollars ($10.6 trillion, excluding China) through broad leakages in the balance of payments and trade mis-invoicing.

Also, total portfolio investment and foreign direct investment of developing country residents in tax havens increased from $0.9 trillion at end 2009 to $1.3 trillion at the end of 2012. 

“GFI’s estimates show that over the past decade, an average of more than $1 trillion per year have flowed out of developing countries unrecorded. Viewed another way, for every dollar of development assistance received by developing countries, more than ten dollars disappear from these countries,” the report noted.