A report from the UN Conference on Trade and Development has indicated that Africa has lost $836bn between 2000 and 2015 due to illicit financial transactions.
The report also states the Illicit Financial Flows (IFF) cost the continent 8.6 billion dollars each year and $40bn lost annually from under-invoicing commodity exports like Gold.
The UN says corrupt practices affects Africa’s ability to achieve Sustainable Development Goals (SDGs) reporting that much of the loss is through corruption, tax evasion and mis-invoicing of exports such as gold.
Terming the IFFs as “a financial haemorrhage,” the UN said the continent would be debt free if money had not left illegally adding that the problem is robbing the continent and its people of their future.
Nigerian President, Muhammadi Buhari echoed UN’s view saying, “The funds involved often come from jurisdictions with scarce resources for development financing, depleted foreign reserves, drastic reduction in collectable revenue, tax underpayment or evasion and poor investment in-flows.”
According to Mukhisa Kituyi, Secretary-General of UNCTAD, the IFFs “deprive Africa and its people of their opportunities, undermining transparency and accountability and eroding confidence in African institutions”.
The UN recommends African countries need to “strengthen engagement in International Taxation Reform” as the report means that the “African Government has much less to spend on important amnesties like health, education, electricity, water and infrastructure.”
Junior Davies, lead author of report called the findings “stunning” expressing his disappointment to find that, such “large amount of money every year which is equivalent to 3.7% of the continents GDP is leaking out of their economy.”
Sanusha Naidu, a senior research fellow at the Institute for Global Dialogue added the report was a “tip of the iceberg” saying it exposes the “unconscionability of the fact that the money that is supposed to be within Africa” is selfishly exploited.
She posited that “this goes really deep” likening the IFFs to the operations of a “mafia or illuminati” looking to “extract and maximize profit from the world for selfish gains.”
“They don’t care about what is happening to other people but talk about poverty reduction, talk about alleviation and talk about development in a very rhetorical way,” she said.
Ms. Sanusha also indicated “the time has come to redefine global compacts like the Kimberly process to include all illicit transfer of diamonds.”
The Kimberley Process Certification Scheme established in 2003 by the United Nations General Assembly as it stands, only prevents “conflict diamonds” from entering the mainstream rough diamond market.
Edwin Ikhuoria, the Africa Executive Director at ONE, a global movement campaigning to end extreme poverty said “there is no magic that will help us achieve its SDGs and if Africa does not mobilize the resources it needs to achieve the SDGs, there is no help from outside that can achieve that. That is the reality.”
In the report, Zambia for instance reports that more than 50% of its copper exports goes to Switzerland but Switzerland doesn’t have records of copper imported from Zambia.
“Solutions to the problem must include international tax cooperation and anti-corruption measures. The international community should devote more resources to the fight against IFFs, including by strengthening the capacity of tax and customs authorities in developing countries,” the report concludes.
