Illicit financial flows (IFFs) are flows of funds across borders, which originate from illicit activities, transferred through illicit transactions or stem from a licit activity but used in an illicit manner. IFFs are hugely detrimental to Africa’s potential to achieve the Sustainable Development Goals as they cause a major drain on capital and revenues, undermine just fiscal systems and reduce resources available to governments to provide key public services. According to Global Financial Integrity (GFI), Zambia cumulatively lost US$9.3 billion to IFFs from trade mis-invoicing and leakages in the balance of payments between 1970 and2008 and an annual average of US$2.9 billion between 2004 and 2013.Given the inherent challenges in calculating the volume of IFFs, especially those emanating from corruption, this study sought to identify some of the key risk factors, which make Zambia vulnerable to outflows of IFFs. We selected Zambia, as part of eight other countries, including the Republic of the Congo (Congo), Côte d’Ivoire, Ethiopia, Kenya, Mauritius, Morocco, Nigeria, and South Africa, due to economic aspects such as reliance on economic sectors known to be linked to high levels of IFFs (e.g., extractives). Another consideration was the country’s potential attractiveness as a transit or final destination for IFFs. This report therefore explores existing knowledge about the types, sources and destinations of IFFs in Zambia, and identifies some of the governance and structural drivers, which exacerbate the risks of IFFs.
