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About US$88.6 billion illegally leaks out of Africa annually through IFFs – Report

IFFs Workshop.png Participants at an Illicit Financial Flows training

Wed, 6 Jul 2022 Source: thebftonline.com

Africa loses about US$88.6 billion which is 3.7 percent of the continent’s gross domestic product (GDP), annually through Illicit Financial Flows (IFF), the UN Conference on Trade and Development (UNCTAD) has stated in its 2021 Economic Development in Africa Report.

The High-Level Panel, HLP on International Financial Accountability, Transparency and Integrity, FACTI panel for achieving the 2030 Agenda report released in February 2021 cautions that IFFs, from trade mis-invoicing, tax abuse, cross-border corruption, and transnational financial crime, drain resources from sustainable development, as well as worsen inequalities, fuel instability, undermine governance, and damage public trust.

There is broad consensus that the funds being leaked out of Africa, could be used for the continent’s development if successfully retained and would be a matter of survival for Africa’s development which must be treated with urgency.

The United Nations Office on Drugs and Crime (UNODC), in its Strategic Vision for Africa 2030 launched in February 2021, notes that illicit financial flows remain a key impediment to Africa’s attainment of the 2030 Agenda and the African Union Agenda 2063

Looking at the multidimensional and transnational nature of IFFs, significant domestic resources illegally acquired and channelled out, pose a continent-wide development challenge.

The FACTI report states that given the magnitude of illicit outflows, these resources, if recovered have immense transformative potential, noting that tackling these leakages would enable developing countries to provide their citizens with basic social services, such as adequate water, sanitation, electricity healthcare, and housing.

Curbing IFFs, according to UNCTAD, could almost halve the $200 billion annual financing gap Africa faces to achieve the sustainable development goals (SDGs).

It is estimated that Africa has lost up to US$ 1.8 trillion between 1970 to 2008 and continues to lose extensive finances estimated at up to US$150 billion annually through Illicit Financial Flows (IFF) or “Illicit Capital Flight” mainly through tax evasion, mispricing of trade and services by multi-national companies,

It has also been established that the problem of illicit financial flows is exacerbated by corrupt tendencies of government agencies, lack of or weak African institutions both at national and continental levels in all sectors, governance challenges, political instability and conflicts, weak tax administration, and lack of capacity to monitor and curb such criminal activities among others.

It is therefore in this regard among other backward economic circumstances in Africa that a governance and advocacy think tank, TrustAfrica based in Dakar in Senegal put together a two-day training programme to sensitise journalists and media practitioners across the West African sub-region on how to report on Illicit Financial Flows in Africa.

The media workshop was on the theme “Strengthening the capacity of African media in the fight against Illicit Financial Flows’.

The primary objective of the workshop is to discharge the concept of IFFs and appraise the status of IFFs in Africa identifying priority issues for policy change and advocacy as well as assessing the capacity gaps in news reports, especially in the coverage of IFFs in Africa.

The two–day training programme also sought to enhance the capacity of media practitioners in understanding the issues of IFFs and coming out with compelling articles that would have the strength to make an impact and eventually bring about a positive change, especially on illegal revenue leakages in Africa.

Organisers of the training after the workshop formed a network of media practitioners (Dakar Declaration) specialising in IFFs regularly report, inform and editorialise on IFFs and contribute to spurring African governments to increase their efforts to stop IFFs.

Participants were taken through the meaning of IFF and its manifestation across Africa as well as the commercial, criminal and political dimensions of IFFs in relation to corruption and the illegal market of Africa.

Fighting IFFs from Africa, other areas the training concentrated on were strengthening African institutions, involvement with international initiatives as well as reviewing the approach to domestic resource mobilization in Africa.

In his opening remarks, the Executive Director of TrustAfricaDr Ebrima Sall lamented that TrustAfrica is trying to understand the issues of Africa and try to solve them the African way and eventually shape the Africa Africans desire to have for the Continent.

The Continent has suffered many challenges moving from one problem to the other and so leaders and change advocates need system reform and arm themselves to deal with the undesirable changes that occur within Africa that work for everybody, “ we need the resources to avert the change that we want as Africans”, he stressed.

Mr. Sall disclosed that so much is being leaked out of Africa in the area of human resources and about $100billion dollars annually could have been channelled through the development of the Continent depriving the Continent of the development it deserves.

“We need to reclaim what has been lost much we want to stop the leakages, we need to look at the quantum and channel as well as the technical capabilities to be able to achieve our objective of saving our Continent from developmental struggle,”, he emphasised.

He finally said the media should be engaged in the achievement of this objective by exposing the revenue administrative lapses as well as the leakages.

Concerned with the increasing scale and extent of Illicit Financial flows from Africa, particularly from our extractive industries and natural resources which constitute a drain on the resources required for Africa’s development.

Whereby, it is estimated that Africa has lost up to US$ 1.8 trillion between 1970 to 2008 and continues to lose extensive finances estimated up to US$150 billion annually through Illicit Financial Flows (IFF) or “Illicit Capital Flight” mainly through tax evasion, mispricing of trade and services by multi-national companies;

-Aware that the problem of illicit financial flows is exacerbated by corrupt tendencies of government agencies, lack of or weak African institutions both at national and continental levels in all sectors, governance challenges, political instability and conflicts, weak tax administration, and lack of capacity to monitor and curb such criminal activities among others;

-Realising the growing need for domestic resource mobilisation for the attainment of our continental development visions and goals particularly Agenda 2063 and the Common African Position on the post-2015 development agenda, which both call for inclusive growth, sustainable development, and social and economic structural transformation of Africa through optimal utilisation of our natural resource endowments; Conscious that the amount of illicit financial flows from Africa is greater than the inflow of Overseas Development Assistance;

-Convinced that curtailing illicit financial flows through, inter alia, institutionalizing prudent legal and regulatory regimes, including fiscal policies that disallow financial secrecy, fight corruption, institute and/or strengthen African institutions, build African member states capacity for contract negotiation, tax administration and identify and return the resources lost through illicit financial flows can greatly contribute to the alternative sources of financing Africa’s development agenda.

Source: thebftonline.com
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