This is according to a report by international non-profit organisation, ONE. The Trillion Dollar Scandal report, was released ahead of the G20 summit happening in November this year.
According to the report, when corruption is allowed to thrive it inhibits private investment, reduces economic growth, increases the cost of doing business and leads to political instability. For developing countries, the effects of corruption are far worse.
(READ MORE: Corruption a devastating evil in Africa: Murinde)
“In Africa, corruption is a killer. Up to 3.6 million lives could be saved in developing countries if we end the web of secrecy that helps the criminal and corrupt. When governments are deprived of their own resources to invest in the essentials—like nurses and teachers—the human cost is devastating,” said Dr Sipho Moyo, executive director at ONE Africa.
The report said that the central problem with corruption is corrupt people living in both the developing and developed worlds who take advantage of poorly drafted government policies.
If policies are put in place that will increase transparency and combat corruption in three key areas, financial secrecy, natural resource deals and money laundering, financial losses could be significantly reduced.
(READ MORE: African leaders urged to collaborate against corruption)
This could open a number of benefits for developing countries such as increasing foreign direct investment (FDI) and boosting gross domestic product (GDP) by as much as 0.6 per cent annually.
Kenyan anti-corruption manager, John Githongo, added that the policies will come at no cost to the people.
“For too long, G20 countries have turned a blind eye to massive financial outflows from developing countries which are channelled through offshore bank accounts and secret companies. Introducing smart policies could help end this trillion dollar scandal and reap massive benefits for our people at virtually no cost. The G20 should make those changes now,” said Githongo.
ONE said that if the money being siphoned out of developing countries is recovered, it could contribute towards educating 10 million children per year, pay for an additional 500,000 primary school teachers, provide antiretroviral drugs to over 11 million people living with HIV/AIDS and also pay for nearly 165 million vaccines.
The report said that corruption fuelled by secrecy undermines the potential gains that can be made in generating economic growth from natural resources such as oil, gas and minerals.
According to the organisation, “Twenty countries in sub-Saharan Africa are rich in natural resources, but a lack of transparency means it is difficult for citizens to know if they are getting a fair deal and if their resources are being well managed. In far too many instances, they are not.”