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Abstract
Illicit Financial Flows (IFFs) is a major challenge to Zimbabwe's development. They have a direct impact on the country’s stability to raise, retain and mobilize its own resources to finance sustainable economic development. The study finds that Zimbabwe lost over US$32.179 billion during the period 2000 to 2020. The study relies on normative and legal arguments to justify the effects of illicit financial flows. The problems with IFFs are that they are not only illicit but that their effect spreads far beyond their immediate area of occurrence. Zimbabwe has suffered irreparable damage because of illicit financial flows. IFFs are mainly driven by the desire to hide wealth and to evade taxes; perpetrators clearly do not respect the obligations of citizenship. Financial flows are crucial for poor countries and have played an important role in Zimbabwe. Since not all financial flows are good for development, the integration of poor countries into the global financial system poses opportunities as well as risks.
Highlights
Illicit financial flows (IFFs) have been identified as the biggest challenge to development
Combating IFFs is an important element of tackling the crime, corruption, and violent extremism that threaten stability and economic development
The Africa by Africa Growth Initiative Report (2020) indicated that: We find a positive and significant relationship between Gross Domestic Product (GDP) and illicit financial flows
Summary
Illicit financial flows (IFFs) have been identified as the biggest challenge to development They are increasingly becoming a source of concern for developing countries (Massa, 2014). IFFs threaten the fundamental aspects of development, such as the rule of law, the quality and accountability of democratic institutions and, the broader social trust (Reuter, 2017). These illicit outflows largely exceed aid funds and a great proportion of the flows are likely to stem from corruption (Global Financial Integrity, 2017). It is estimated that Zimbabwe lost over US$32,179 billion through IFFs since 2000 (The Zimbabwe Independent, 2020)
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