Measurement of Capital Flight: Methodology and Results for Sub‐Saharan African Countries*

Abstract

Abstract: This paper presents the methodology for the computation of capital flight and reports new estimates of the magnitude and timing of capital flight from 33 sub‐Saharan African countries from 1970 to 2004. Our methodology calculates capital flight as the residual difference between inflows and outflows of foreign exchange recorded in the balance of payments, with corrections for the magnitude of external borrowing, trade misinvoicing, and unrecorded remittances. We find that total capital flight from these countries in this period amounted to $443 billion (in 2004 dollars). With imputed interest earnings, the accumulated stock of flight capital amounted to $640 billion. These numbers exceed these countries’ external debts, which in 2004 amounted to $193 billion, indicating that sub‐Saharan Africa is a net creditor to the rest of the world.