World losing up to R27trn in illicit economy | Fin24
 
  • Eskom capacity

    Eskom faces structural problems - its ability to supply power is at its lowest in years.

  • Gordhan's testimony

    Here are six quotes that summed up the hottest moments at the inquiry.

  • Labour trends

    Here's where you're most likely to find a job.

Loading...

World losing up to R27trn in illicit economy

Oct 27 2015 09:39

Cape Town - Counterfeiting and piracy will cost the global economy about R24.17trn in 2015, which is nearly 10% of the global trade in merchandise.

That is according to a new paper by the World Economic Forum (WEF) Meta-Council on the Illicit Economy, released at the WEF Summit on the Global Agenda in Abu Dhabi on Monday.

Eliminating the illicit trade in tobacco could generate annual revenues of up to R423.48bn for governments, according to the World Health Organisation.

The cost of illicit trade to human life is even more striking, the paper shows. “Sub-standard malaria medicines led to the deaths of over 120 000 children in sub-Saharan countries in 2013 alone, while globally, an estimated 700 000 people die each year because of counterfeit malaria and tuberculosis medicines. Counterfeit rates across all sectors have historically run as high as 40% and even today are estimated at 17%.”

About 21 million people are victims of forced labour, which generate illegal profits of at least R2trn, the paper shows.

While the overall industry is hard to measure, another WEF report estimates the value of the “shadow economy” at R8.877trn, a figure that rises to R27.31trn when money laundering is included.

Chinese state-owned banks have been named as “conduits” for counterfeiters, while big US banks such as Bank of America, JP Morgan Chase and Wells Fargo have been cited as “financial conduits” for the human smuggling industry, the report says.

The illicit economy is formed from the proceeds of illicit trade which is, in turn, largely rooted in organised crime, explained the WEF’s Jean-Luc Vez. “Whether it is human trafficking, arms trafficking, the illegal wildlife trade, counterfeiting or money laundering, these activities are incredibly lucrative and fuel the magnitude of the illicit economy.”

TABLE: Most recent estimate of global illicit economy

(Source: Global Agenda Council on Illicit Economy, IGF)

What to do

The report said the most promising private sector anti-trafficking initiatives and next steps were:

1. Technology and data analysis tools can be used to identify potential traffickers and track transactions.

2. Research and collaborative efforts should be made to promote cross-stakeholder collaboration and public-private partnership, particularly on information sharing and knowledge transfer.

3. Engagement of senior corporate leaders can create systemic change throughout a company.

4. Individuals and employees can make a difference through raising awareness, and preventing and flagging possible cases of human trafficking.

5. Best-practice sharing across industries could foster dialogue and a culture of transparency.

6.  Academic institutions, particularly business and public-policy schools, have a role to play in training the next generation of business and community leaders in anti-trafficking strategies and entrepreneurial solutions.


Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

world economic forum  |  piracy  |  counterfeit
NEXT ON FIN24X

 
 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Was Momentum fair when rejecting R2.4m insurance claim?

Previous results · Suggest a vote

Loading...