There are a lot of problems that ail the African continent. Extreme poverty, conflict, water and sanitation issues, and food insecurity are all concerns that receive a good deal of attention from funders and NGOs. Corruption, too, has been a major focus of grantmaking that we've written about here.
But one niche in the corruption field that we haven't talked about much is illicit financial flows. The Ford Foundation is among those funders that care about Africa’s dirty money problem, and it recently made a $3 million grant to back TrustAfrica’s advocacy efforts in this area.
Ford has long been a big fan of TrustAfrica, an NGO based in Senegal that works on a range of challenges facing the continent and engages in a lot of regranting to more local groups. Ford has given the organization over $20 million since 2006.
And TrustAfrica has many other powerful friends in the foundation world, including Gates, Hewlett, MacArthur, Open Society Foundations, and Humanity United.
Ford’s latest grant will help TrustAfrica build a movement against illicit financial flows, which is money earned illegally and then transferred to be used somewhere else. We’re talking about ill-gotten gains accumulated through corruption, tax evasion, embezzlement, bribery, and cross-border smuggling. That doesn't even include the money earned through drug trafficking.
Estimates of the economic losses suffered due to illicit financial flows vary, but the UN calculates the losses between $1.2 and $1.4 trillion over a 30-year period. The African Union estimates that the continent loses around $150 billion annually due to such nefarious activities. Keep in mind, these are just educated estimates, since it’s pretty difficult to track illegal money definitively.
Look, no one thinks that stopping the illicit cash outflows is a cure-all for Africa’s economic development woes. The economy of a continent is a bit more complicated than that.
But the last thing strapped African countries need is to be hemorrhaging cash to Swiss bank accounts. And funding efforts to solve this problem is a great example of leveraging philanthropic dollars in a smart way, since success here would bring new substantial resources into play to address Africa's problems.
Even the biggest funders have miniscule resources compared to the problems they're tackling. They need to chose their battles wisely, and zeroing in on Africa's dirty money problem is a great choice.