Poor sales administration is hurting developing economies, says UNCTAD
Countries dependent on exporting single commodities are losing crucial foreign exchange earnings, tax and income needed for development due to mis-invoicing of their goods,
a study by the United Nations Conference on Trade and Development
(UNCTAD) shows. The study was released at
UNCTAD’s 14th session meeting
in Nairobi Kenya on 17th July 2016, and investigates instances of excessive and under-documented invoices for primary commodity exports, based on a sample of resource-rich developing nations that include Chile, Côte d’Ivoire, Nigeria, South Africa and Zambia. It shows cases of under-invoicing as well as over-invoicing are systemic among all five countries, with under-invoicing occurring more frequently, suggesting money continues to be needlessly lost from developing economies in need of capital flows. “This research provides new detail on the magnitude of this issue, made even worse by the fact that some developing countries depend on just a handful of commodities for their health and education budgets,” said UNCTAD’s
Secretary-General, Mukhisa Kituyi
. While South Africa, the only middle-income nation of the five included, has a more diversified export economy, the report reveals that under-invoicing on its gold exports from 2000 until 2014 amounted to US$78.2 billion, around 67 percent of the total. Data from India, South Africa’s top trading partner, suggests it imports as much as 35 percent of the gold exported by South Africa, yet South African data shows its total export to India reaches no more than 4.6 percent. Between 1990 and 2014, Nigeria is shown to have lost around US$69.8 billion in oil revenues from sales to the US, due to under-invoicing. The amount makes up about a quarter of the total sold for that period. Another US$16 billion in copper sales exported from Chile to the Netherlands in that time is recorded by Chile, yet unrecorded by the Netherlands. Tax evasion, as well as foreign exchange and capital account controls, are cited as possible motives for the illicit trade finance flows, the study concludes. The report references the
United Nations’ sustainable development goal [number 16.4]
to “significantly reduce illicit financial and arms flows, strengthen the recovery and return of stolen assets and combat all forms of organised crime” by 2030.
By Jack Aldane
Photo: 龙龙