Corruption Currents - Ethiopian Illicit Outflows Doubled In 2009, New Report Says

By Christopher Matthews

Ethiopia lost $11.7 billion to outflows of ill-gotten gains between 2000 and 2009, according to a coming report by Global Financial Integrity.

That’s a lot of money to lose to corruption for a country that has a per-capita GDP of just $365. In 2009, illicit money leaving the country totaled $3.26 billion, double the amount in each of the two previous years. The capital flight is also disturbing because the country received $829 million in development aid in 2008.

According to GFI economist Sarah Freitas, who co-authored the report, corruption, kickbacks and bribery accounted for the vast majority of the increase in 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,” Freitas wrote in a blog post on the website of the Task Force on Financial Integrity and Economic Development.

The report, titled “Illicit Financial Flows from Developing Countries over the Decade Ending 2009,” drew on data from the World Bank and the International Monetary Fund on external debt and trade mis-pricing to calculate illicit capital leakage. The study, which will be released later this month, measures the illicit financial flows out of 160 different developing nations.

Ethiopia is one of the poorest countries on earth as 38.9% of Ethiopians live in poverty, and life expectancy in 2009 was just 58 years.

“The people of Ethiopia are being bled dry,” Freitas wrote. “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.”