Illicit Financial Flows and State Capture in Sub-Saharan Africa: A Power Elite Theory Perspective

Abstract

Using the Power Elite Theory (PET) as analytical lens, this paper explored the interplay of state capture and illicit financial flows (IFFs) for major emitters in Sub-Saharan Africa (SSA). This paper argues that IFFs in SSA are intrinsically linked to the phenomenon of state capture, which can be better understood through the lens of PET. The nations represented in the emissions data encompass chiefly the Democratic Republic of the Congo, Kenya, Angola, and South Africa. The key sectors highlighted include chiefly the extractive industries, such as natural gas, petroleum, mining, and minerals. The present work elucidates the relationship between state capture and IFFs through a systematic conceptual framework developed. The paper highlighted factors such as deficient governance, regulatory challenges, and the role of the private sector in driving IFFs linked to PET and state capture. The study showed that, on average from 1980-2018, for the major emitters of IFFs, losses in terms of trade as a percentage of Gross Domestic Product (GDP) ranged from 3.4% to 33.5% from the lowest to the highest emitter. Tracing, the losses, indicate a direct link to power elites and state capture phenomena. Additionally, the paper explored the long-term and short-term impacts of IFFs, including their effects on the environment, the erosion of public trust, unprecedented financial losses, impacts on trade, and the impairment of overall development. A Red-Black to Green Lens Conceptual Diagram was developed. This tool helped to further shed more light on the nature of the problem as embedded within the existing challenges inherent to Zone C. In addressing the problem across the region, the paper indicates that, in addition to other interventions, the greatest solution lies in the commitment of all stakeholders in the economy, including the media, civil society organizations (CSOs), the general populace, and international partners within the region.