Cryptocurrencies against capital flight

Tunis - Blick über die Stadt. Bild von grolli77 via flickr.com. Lizenz: CC BY-SA 2.0 Deed

Capital flight is a massive, very costly problem for Africa. A Nigerian regulator now suggests combating it with blockchains and AI at a pan-African event. He likely means stablecoins.

At a Pan-African Conference on Illegal Wealth Flows on June 27 in Tunis, Olanipekun Olukoyede, head of Nigeria’s „Economic and Financial Crimes Commission (EFCC),“ presented a staggering figure: $88.6 billion. That’s how much capital illegally leaves the continent every year.

Olanipekun Olukoyede delivering the keynote address at the conference in Tunis.

Corporations evade taxes, kleptocrats loot countries, the wealthy secure their profits, and the money ends up in foreign bank accounts in Switzerland, the Bahamas, Dubai, and so on. If it were possible to stop capital flight, it would be the best possible development aid for the continent. With this money, so many roads, hospitals, bridges, desalination plants, solar power plants, schools, and more could be built.

Olukoyede then stated that blockchain and AI could be a solution to the problem. They could make financial transactions more transparent, making it harder for criminals to conceal their activities. By following the money trails, it can often be retrieved from abroad, which, according to Olukovede, was the case in 2020 when $311 million sent to the US by a „Nigerian leader“ was recovered.

With the same technology, financial institutions could also be made more efficient, and fraud and corruption reduced—a massive problem, especially in Nigeria.

When Olukovede says „blockchain and AI,“ he remains rather vague. What he probably means are „Bitcoin and stablecoins“ as well as „blockchain analysis.“ If Bitcoin, Tether, DAI, or USDC were to circulate as currencies in Africa, with blockchain analyses, with or without AI, the trails of capital flight could be tracked much more efficiently than by traditional means. For a token like USDT or USDC, accounts could be frozen, exchanges contacted, and so on.