It is now recognized that poverty reduction efforts in Africa are undermined by capital flight. Previous evidence has shown that trade misinvoicing is an important channel of capital flight. This study proposes to examine the magnitude, trend and patterns of capital flight through trade misinvoicing in Africa over the period 1970 to 2018 using disaggregated trade data from the United Nation’s COMTRADE database as well as the IMF’s Direction of Trade Statistics (DOTS) database. The objective of the empirical investigation is to generate evidence that may help to better understand the phenomenon and identify ways to tackle the problem undermining domestic resource mobilization and the development of Africa. The proposed study involves three empirical exercises: (i) Estimation of trade misinvoicing at a disaggregated level by major trading partners, and by major export and import products, (ii) Estimating the lost tax revenue due to trade misinvoicing, and (iii) Analyzing the determinants of trade misinvoicing in Africa. The evidence from the study will shed light on which trading partners are involved, the commodities that are most affected by trade misinvoicing, and the factors affecting the phenomenon.
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