Illicit Financial Flows in Kenya: Mapping of the Literature and Synthesis of the Evidence

I llicit Financial Flows (IFFs) are a persistent challenge in developing countries, particularly in Sub-Saharan Africa (SSA). IFFs account for huge sums of money transferred out of SSA countries illegally, stripping these countries of resources that could be used to finance much-needed public services such as security, justice, education and health. For instance, it is estimated that Kenya has been losing an average of KES 40 billion every year through illicit financial flows since 2011 as government, local firms and multinationals engage in fraudulent schemes to avoid tax payments. This synthesis brings together the evidence on IFFs and interrogates common themes, practices and policies on IFFs and associated tax reforms to tackle IFFs in Kenya. It analyses the evidence on nature, magnitude, determinants and implications of IFFs and assesses to what extent institutional policy and legal frameworks have succeeded in curbing IFFs. The paper adopts the Global Financial Integrity (GFI) Research Institute’s defination of IFFs as ‘cross-border transfers of funds that are illegally earned, transferred, or utilized.’ The synthesis encompasses published and grey literature on IFFs and relevant policy, legal and administrative frameworks.