Illicit financial flows and inequality in Africa: How to reverse the tide in Zimbabwe

Abstract

ABSTRACT In a 2017 UN report on the state of inequality in sub-Saharan Africa, Southern Africa was identified as the region with the highest rate of income inequality. Resource dependent states were also identified as having high rates of inequality, and illicit financial flows were identified in the report as a leading cause of inequality. Using Zimbabwe as a case study, this article critically assesses which tools are best for preventing illicit financial flows in order to achieve developmental equity in resource rich developing economies. The extent to which multinational companies currently comply with various financial disclosure rules is assessed through a review of two companies operating in Zimbabwe. The question that this article aims to ultimately answer is this: Can regulation serve as an effective mechanism to sufficiently tackle illicit financial flows and break the extractive-inequality link that is common across resource rich African countries?