Africa urged to combat illicit financial flows for better future Featured

Africa urged to combat illicit financial flows for better future

The UN Economic Commission for Africa (ECA) on Wednesday reiterated the importance of combating illicit financial flows for Africa's better future.

The call was made by ECA's Executive Secretary, Vera Songwe, who reiterated that combating bribery, money laundering and tax evasion should be a priority if Africa has to finance its transition to middle income status and increase prosperity.

According to the ECA, in the last three decades to 2009, Africa has lost an estimated close to 1.4 trillion U.S. dollars. In addition, losses through non-trade channels averaged an estimated 27 billion U.S. dollars annually between 2005 and 2014.

The African continent, under the leadership of the African Union (AU), has been following the issue of illicit financial flow at the highest level by through the appointment of the High Panel led by former South Africa President Thabo Mbeki, which are actively engaging stakeholders to curb the flow of much needed resources from the continent.

According to the report of President Mbeki's high-level panel on illicit financial flow, the continent loses between 50 billion U.S. dollars and 80 billion U.S. dollars a year due to illicit financial flows.

The ECA chief further called governments to take action on several fronts, in which leadership level commitment is said to be a critical demonstrative effect. As such governments should aggressively investigate and prosecute money launderers and companies that evade taxes.

The UN estimated that the amount Africa loses through illicit financial flows is roughly double the Official Development Assistance that Africa receives, and also outweighs the 42 billion U.S. dollars that the continent received in Foreign Direct Investment (FDI) in 2017, according to the ECA.

"For a continent that needs substantial financial resources to meet its development needs, we should celebrate our accountability agencies, the auditor general, the chief justice and the media to support the collective effort," the ECA quoted Songwe as saying on Wednesday.

"Songwe further asked for more integrity and transparency among leaders and officials of the public and private institutions through asset declarations; and urged African countries to sign up to the international tax information treaties to enable exchange of information," the ECA said in a statement on Wednesday.

"Countries should also build human and technological capacities of agencies tasked with tackling illicit financial flows, and institute information sharing and collaboration between relevant government agencies and ministries," she said.

The ECA chief further applauded countries that have ratified existing global and continental initiatives on halting illicit financial flows.

The AU Commissioner for Trade and Industry, Albert Muchanga, had also previously revealed that Africa loses in excess of 80 billion U.S. dollars annually from illicit financial flows, which he described as "impediment to Africa's economic transformation."

Muchanga mentioned over-invoicing and mispricing to avoid paying taxes and declaring dividends as well as accumulating all the benefits of mining in other jurisdictions as examples of creative accounting.

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