Unjust Enrichment from Official Corruption in Africa: Theory and Model on how Lenders have benefited

Arbeitspapier

A 2015 World Bank report on the achievement of Millennium Development Goals (MDGs) revealed that since the 1990s, extreme poverty has been decreasing in all regions of the world with the exception of Africa where about 50 percent of countries in Sub-Saharan Africa did not achieve the MDG extreme poverty target despite the sub-region enjoying more than two decades of GDP growth resurgence. The purpose of this chapter is twofold. First to understand the interconnections between the large pool of capital transferred to the OECD countries and the corrupt deposits of stolen public funds. Second, to illustrate how such diversion of funds overseas are related to the spread of poverty in the African economies. We enunciate a ‘poverty multiplier theory’ and propose a model for its application within an African context. The ‘poverty multiplier theory’ postulates that: (i) one unit of currency deposited abroad represents a loss in financial development at home (ii) a fraction of the unit currency placed in foreign bank accounts is redirected to the domestic economy in the form of external debt. This external debt is further siphoned overseas through interest and loan principal repayment. Policy implications of these processes are discussed.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: AGDI Working Paper ; No. WP/16/034

Classification and Topics

• Classification: Wirtschaft ; History of Economic Thought since 1925: General ; Foreign Aid ; International Relations, National Security, and International Political Economy: General ; International Linkages to Development; Role of International Organizations ; Economywide Country Studies: Africa
• Subject: Poverty ; External Debts ; Corruption ; Capital flight ; Development

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Asongu, Simplice ; Nwachukwu, Jacinta C.
• Event: Veröffentlichung
• (who): African Governance and Development Institute (AGDI)
• (where): Yaoundé
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/149958
• Last update: 10.03.2025, 11:45 AM CET