ZAMBIA LOSES US$ 9 BN IN ILLICIT TRANSFERS

Almost US$ 9 billion has illicitly been siphoned out of the Zambian economy, in the last decade, Global Financial Integrity, a US anti-graft watchdog has revealed.

The Reuters reports that the amount is almost half of Zambia’s current Gross Domestic Product,

Channelling of profits to offshore banks and tax havens, are among the notable avenues of illicit financial outflows, of resource wealth, often squandered in the developing world.

Global Financial Integrity’s latest report further indicates that the southern African nation lost US$ 8.8 billion to capital flight, between 2001 and 2010.

The Zambian government said the report was in line with its own findings and vowed to crack down on culprits.

 “Of that,US $ 4.9 billion can be attributed to trade mis-invoicing, which is a type of trade fraud used by commercial importers and exporters around the world,” GFI economist Sarah Freitas said.

The way this typically works is that an importer pretends to pay more to foreigners than they actually spend, with the difference put discreetly into banks or other assets abroad.

Major commodity producers seem especially susceptible to these trends because of the often opaque nature of resources industries.

And Finance Deputy Minister, Miles Sampa has welcomed the report, stating that it is in line with what the Zambian government has previously expressed concern, as regards, tax avoidance and income leakages in general.

The GFI’s findings on Zambia, come ahead of the release, on Tuesday of its full report, measuring illicit financial flows out of 150 developing countries and emerging economies in the last decade.