Capital Flight and its Determinants: The Case of Ethiopia
This study attempts to estimate the volume of capital flight from Ethiopia and its determinants, focusing on economic, institutional, and political determinants. Capital flight is estimated at $31 billion over the 1991–2012 periods. On average, the country has lost over 1 billion per annum during the EPRDF regime. The empirical evidence suggests that macroeconomic instability, the degree of financial market deepening, exports, interest rate differentials, political instability, corruption, and debt‐creating flows are the most important determinants of capital flight from Ethiopia. The political environment is also found to be crucial. Generally, capital flight was high before violent regime changes and low in the subsequent periods, when regimes were in the process of establishing a firmer grip on power; after this point, however, capital flight began to rise significantly again. The historical analysis points to potential causality running from political factors to capital flight.
https://onlinelibrary.wiley.com/doi/ful ... 8268.12180
The average annual outflow was $2.6 billion during 2004 and 2013. This is a sizeable sum of money by any standard. For instance, according to estimates reported by the World Bank, the amount of official development assistant (ODA) Ethiopia received in 2010 was $4 billion but total amount of IFFs during that year was $5.6 billion.
This means in 2010 alone Ethiopia’s IFFs exceeded the ODA it received that year by $1.6 billion. In other words, Ethiopia’s IFFs amounted to diverting the entire aid money of 2010 to foreign banks and then still transfer abroad an additional sum of money.
During the entire period (2004 to 2013) the total amount of money that Ethiopia lost due to IFF was $26 billion. This amounts to stealing nearly $300 per citizen. Alternatively, the size of stolen money was about 11 times the total the amount of emergency aid being sought from donors in the current year to buy cereals from abroad and feed the drought victims.
https://addisstandard.com/rush-for-the- ... elerating/
An upcoming report by Global Financial Integrity finds that Ethiopia, which has a per-capita GDP of just US$365,lost US$11.7 billion to illicit financial outflows between 2000 and 2009. More worrying is that the study shows Ethiopia’s losses due to illicit capital flows are on the rise. In 2009, illicit money leaving the economy totaled US$3.26 billion, which is double the amount in each of the two previous years.
https://financialtransparency.org/illeg ... 6-billion/