A joint report by Global Financial Integrity (GFI) and a team of global experts on unrecorded capital flight says developing countries, including Malawi, are net creditors to the rest of the world.
The report by GIF—a Washington-based organisation that works to curtail illicit financial flows by producing ground-breaking research—has shown that developing countries have lost $16.3 trillion through broad leakages in the balance of payments, trade mis-invoicing and recorded financial transfers since the late 1990s.
A press statement released yesterday by GFI indicates that tax havens have been key facilitators of movements of licit and illicit capital out of and into developing countries.
Reads the statement: “These resources represent immense social costs that have been borne by the citizens of developing countries around the globe.”
Anti-money laundering law expert Jai Banda said in an interview yesterday it would not be surprising for Malawi to rate high among the countries in the sub-Saharan African countries in terms of illicit financial flows.
He said most traders in the country have dual citizenship, which makes it easy for them to transfer funds illegally out of the country.
“The transfers are not done through Reserve Bank of Malawi [RBM], that is why some have been caught externalising funds at the airports,” said Banda.
He said some business operators do not use commercial banks to avoid high rates and prefer to get the money from the parallel or black market.
The study also pays special attention to the role of China’s capital flows in the analysis of net resource transfers for all developing countries, which affects the magnitude of cumulative net transfers.