Re-Examining the Determinants of Capital Flight and the Potential Benefits of Capital Flight Repatriation For SSA

The purpose of this paper is twofold. First, it re-examines the determinants of capital flight to account for the roles of investment, financial development and institutions in Sub-Saharan Africa (SSA). Second, it argues for the repatriation of funds that had fled the region and estimated the alternative foregone in terms growth if flight capital were repatriated and invested domestically. Using dataset for 28 countries in SSA, the importance of these additional determinants was established. The results of the simulation exercise of the financing gap model showed that SSA would have had an additional growth in GDP per capita of 1.7% on the average if capital flight had been repatriated successfully and invested domestically. Policy implications are highlighted from the results.