Fighting illicit financial flows from Ethiopia

Filed under - Financial markets

Published on 15 June 2015 as a U4 Helpdesk answer
Can you provide an overview of illicit financial flows from Ethiopia and measures to fight them?

Purpose

Provide support to donor activities in this area.

Content

1.Overview of Illicit financial flows from Ethiopia

2.Fighting illicit financial flows from Ethiopia

3.References

Caveat

The literature on illicit financial flows from Ethiopia is very scarce. More research on the mechanisms used for capital flight is necessary to better understand the measures that should be taken to effectively fight illicit financial flows from Ethiopia. In this context, this answer provides a wide range of measures assessed in the international literature as important to curb corruption and illicit financial flows.

Summary

Illicit financial flows have pervasive effects on developing countries’ social and economic development. In many countries, the volume of financial outflows exceeds the inflows of aid and foreign direct investment due to corruption, money laundering, tax evasion and avoidance. Recent studies show that Ethiopia is among the top ten African countries by cumulative illicit financial flows related to trade mispricing. This amount may be much higher if funds from corruption and other criminal activities are considered. In any case, corruption plays a key role in facilitating the flow of illicit funds, and measures to fight corruption are instrumental for preventing and combating the movement of illicit funds.Ethiopia has been making progress in improving its legal and institutional framework to combat corruption, but the government needs to ensure that reforms and new rules are now implemented and enforced effectively. A few areas, such as business regulations, taxation, the media and civil society, could still benefit from further legal improvements in order to contribute to corruption prevention and detection and ultimately end illicit financial flows. 

Author(s): Maíra Martini, Transparency International, mmartini@transparency.org
Reviewed by: Craig Fagan, Transparency International, cfagan@transparency.org
Publication date: 15 June 2015
Number: 4

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Country / Territory - Ethiopia   
Region - Sub-Saharan Africa   
Language(s) - English   
Topic - Financial markets   

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