More than £1tn may have flowed out of Africa illegally over the last four decades, most of it to western financial institutions, according to a new report.

Even using conservative estimates, the continent lost about $1.8tn (£1.18tn) – meaning Africans living at the end of 2008 had each been deprived of an average of $989 (£649) since 1970, according to the US-based research body Global Financial Integrity (GFI).

The report says globally in recent years much attention has been focused on corruption – the proceeds of bribery and theft by government officials – and this only makes up about 3% of the cross-border flow of illicit money around the world. The proceeds of commercial tax evasion, mainly through trade mis-pricing, contribute 60% to 65% of the global total, while drug trafficking, racketeering and counterfeiting make up 30% to 35%. The report says Africa's percentages are likely to be roughly the same.

The scourge eats into Africa's total GDP, says the report, Illicit Financial Flows from Africa: Hidden Resource for Development. Losses rose from around 2% of GDP in 1970 to a peak of 11% in 1987, then dropped below 4% for much of the Nineties, only to increase again to 8% of GDP in 2007 and 7% in 2008.

The GFI says that existing research shows that most flows to western financial institutions, and calls on G20 members to crack down on international banks and offshore financial centres.

Illicit outflows from Africa grew at an average 11.9% a year over the four decades. Some of this is attributed to oil price rises and increased opportunities to mis-price trade.

"It is not unreasonable to estimate total illicit outflows from the continent across the 39 years at some $1.8tn," writes Raymond Baker, director of the GFI.

"This massive flow of illicit money out of Africa is facilitated by a global shadow financial system comprising tax havens, secrecy jurisdictions, disguised corporations, anonymous trust accounts, fake foundations, trade mis-pricing and money laundering techniques."

This capital loss has a devastating effect on development and attempts to alleviate poverty, the report says. Even by a more conservative estimate, using accepted economic models from the World Bank and the IMF, Africa has lost $854bn in cumulative capital flight between 1970 and 2008, the report notes. This would be enough to not only wipe out its 2008 external debt of $250bn but potentially leave $600bn for poverty alleviation and economic growth.

"Instead, cumulative illicit flows from the continent increased from about $57bn in the decade of the 1970s to $437bn over the nine years 2000-2008."

Africa lost around $29bn a year between 1970 and 2008, of which the Sub-Saharan region accounted for $22bn. On average, fuel exporters including Nigeria lost capital at the rate of nearly $10bn a year. "The impact of this structure and the funds it shifts out of Africa is staggering. It drains hard currency reserves, heightens inflation, reduces tax collection, cancels investment, and undermines free trade. It has its greatest impact on those at the bottom of income scales in their countries, removing resources that could otherwise be used for poverty alleviation and economic growth."

It says that the huge outflow explains why aid efforts to reduce poverty have underachieved in Africa. "According to recent studies by GFI and other researchers, developing countries lose at least $10 through illegal flight capital for every $1 they receive in external assistance."