Multinational corporations operating in Africa are involved in illicit transfer of most of the $ 1.5 trillion they make in Africa each year back to the developed countries, hurting African economies in the process, a new report shows.
The report on Illicit Financial Flows from Africa: Scale and Developmental Challenges blames multinational corporations for draining hard currency reserves from the continent, stimulating inflation, reducing tax collection and deepening income gaps.
It faults the multinational corporations for "perpetuating Africa's economic dependence on other regions".
"The depletion of investments and stifling of competition caused by these illicit transfers actually undermine trade and worsen the socio-economic fabric of poor communities in Africa," the report says, calling on countries to strengthen regulatory frameworks.
Some forms of illicit commercial activities include tax avoidance and tax evasion.
These activities basically shift money beyond the reach and appropriate use of domestic authorities.
Richard Tusabe, the Deputy Commissioner General and Commissioner for Customs at Rwanda Revenue Authority (RRA), speaking to The New Times, yesterday, said illicit profit transfers from Africa is indeed a problem, but noted that in Rwanda the tax body "works with organisations advanced in international taxation as part of efforts to mitigate illicit cash transfer."
The report has been circulated among members of the High-Level Panel on Illicit Financial Flows from Africa; an African Union-endorsed think-tank charged with recommending appropriate policies and seek repatriation of the stolen moneys back to the continent.
The panel is chaired by the former South African leader Thabo Mbeki.
The report records great variations between regions, countries and even between sectors of activities.
Two-thirds of the outflows was attributed to only two regions, West Africa and North Africa, with 38% and 28%, respectively.
"Each of the other three regions (Southern, Eastern and Central Africa) registered about 10% of total Africa's illicit financial flows," perhaps because of lack of data and due to the poor quality of available data, the report warns.
The consequences of these illegal transfers on Africa are dire, according to the report findings.
Illicit financial flows, the report says, worsen the socio-economic fabric of poor communities and leads to shorter life expectancy due to limited spending in providing social services such as health care.
On what causes illicit outflows, it points to structural and governance elements, saying they are the leading drivers.
It says "increasing trade openness without adequate regulatory oversight and non-inclusive economic growth essentially may lead to a higher number of individuals that seek to avoid domestic taxes."
The World Trade Organisation estimates that corporations control about 60% of world trade, which amounts to about US$40 trillion.
Tusabe says, "With globalisation, countries can't do away with them [corporations], they come with their challenges, but we try to counter the phenomenon of illicit cash transfers."
Since the early 1960s when multinationals entered Africa, foreign direct investment by the multinationals could have been as high as US$1.5 trillion a year.
It is estimated that Africa lost about US$854 billion in illicit financial flows over the 39 year period (1970-2008).
A yearly average of about US$ 22 billion is lost which is a considerable amount compared to both the external debt of the continent and the official development aid (ODA) received over the same period.
"Indeed, it is equivalent to nearly all the ODA received by Africa during that timeframe a record level of US$46 billion in 2010," the report adds.
"Just one-third of the loss associated with illicit financial flows would have been enough to fully cover the continent's external debt that reached US$279 billion in 2008",
It notes that the trend has been increasing over time and especially in the last decade, with an annual average illicit financial flow of US$50 billion between 2000 and 2008 compared to a yearly average of only US$9 billion for the period 1970-1999.
It contends that a significant amount of illicit outflows have not been recorded in government statistics.
Experts say the report adds a new dimension to Africa's underdevelopment dilemma.
On possible solutions, the report proposes the creation of disincentives to trade mispricing and the strengthening of regulatory frameworks.
"We try to identify the actual transfer prices that these companies charge their subsidiaries and see if they are not over inflating," Tusabe says.
At the regional level, it calls for strengthening of the stolen asset recovery regime; and the development of an effective regional advocacy and sensitisation strategies.
The High-Level Panel on Illicit Financial Flows from Africa was established last year following a resolution of the 4th Joint Annual Meetings of the ECA/AU Ministers of Finance, Planning and Economic Development in Africa in March 2011.
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MY BONE ABOUT THESE THIEVES IS THIER ABILITY TO ROAM FREELY AS IF THEY ARE DOING THE RIGHT THINGS THEY ARE IGNOBLE INFAMOUS WORTHLESS DIABOLICAL WASTE OF HUMANITIES .WHAT AFRICA SHOULD DO IS TO MAKE SURE THAT THEY PURSUE THIER PAYMENST IN THIER IN MEMBER STATES CURRENCIES, THAT SHOULDGIVE THEM AN ADVANTAGE ALSO IT WOULD POINT OUT THE DECEPTION WHEN STAGGERING AMMOUNTS OF MONEY ARE BEING DEPLETED FROM THE TREASURIES. I AM NOT A FINACIALI ANNALYST BUT KNOWING THIS IS NOT A NEW PROBLEM; WHY DONT THEY PURSUE PAYMENTS IN GOLD, THEY CAN NOT SWINDLE AS MUCH THEN AS THEY WOULD LIKE TO AND THIS WOULD RETURN SOME OF THE HUMONGOUS AMMOUNTS OF GOLD STOPLEN FROM AFRICA . TRADE WITH ONE BASIC CURRENCY FOR ALL AFRICA. ONE AFRICAN BANK ONE DENOMINATION BASED SOLELY ON TRADE . THESE MONIES CAN ALSO BE USED TO MAKE ADVANCES ON INFRASTRUCTURE RESEARCH IN TECHNOLOGY RAIL THAT LINKS ALL AFRICA UNLESS AFRICA IS GOING TO USE AIR FOR CARGO AND OTHER MERCHANIDSE WHICH WOULD BE IMPOSIBLE .IT IS APPROPRIATE THAT A RAIL LINK IS ESTABLISHED FROM NORTH TO SOUTH EAST WEST ETC. THE DAM PROJECTS THAT ARE ELDUING CERTAIN AFRICAN COUNTRIES. WHEN WE LOOK AT THE THEFT THE FRAUD OF THESE CORRUPT INDIVIDUALS YOU SEE WHY EDUCATION IS IMPORTANT WE NEED INTENSE REVEUNUE SERVISES AS WE SEE THAT AFRICA IS THE GIANT OF CONTINENTS NOT JUST SOEM BACK WATER WHERE THESE THIEVES CAN STEAL WITH IMPUNITY. THIS IS WHY THEY DO NOT WANT JURISPRUDENCE IN AFRICA THEY ARE AFRAID THAT IF YOUR STANDARDS AND INTELLECT IMPROVE THEY WILL BE LIABLE; THEY WONT BE ABLE TO PLUNDER WITH THE IMPUNITY THEY EXERCISE THEY WILL FACE JAIL IN AFRICA ,NOT THE SLAP ON THE WRIST THEY GET IN IN THE WEST. THEY STEAL TRILLIONS OF DOLLARS THEY GET A FINE , WHICH THEY COVERED FOR WHEN THEY STOLE THE MONEY IN THE FIRST PLACE , SO THE PROBLEM IS THAT THERE IS NO PUNISHMENT FOR THESE CROOKS ,THEY ARE REWARDED FOR THEIR LARCENY. THIS CORRUPT EMPIRE THAT IS FRIZZLING OUT MUST NOT GO UNCHECKED WHAT AFRICA MUST DO IS TURN OFF THE TAPS LIKE THEY DID IN S. SUDAN AND SEE HOW THEY LIKE THAT. THIS IS WHAT I SAY TO AFRICA THE ICC IS NOT READY TO BE AN IMPATIAL ABRITARTOR IN ANY AFRICAN PROBLEMS ,NOT ONE !! THEY ARE NOT CAPABLE TO BRING TO BOOK THIEVES WHO'VE BEEN PREYING ON AFRICAN CHILDRENS LIVES CAUSING CONFILCT REFUGEE MOVEMENTS ALL THESE PLAGUES HUNGER MALNUTRITION DISEASES ARE ALL CONNECTED PARTS OF A LONG DOT THAT SPELLS GREED DECEPTION THIEVERY INTRIGUE CUNNING CONNIVANCE. DO NOT BE FOOLED WHEN COUNTRIES CAN'T MEET THIER WAGES PAYMENTS TO CIVIL SERVANTS OR THOSE IN NEED OF CARE BECAUSE THE WESTERN THIEVES HAVE SCALPED TWO THIRDS OF THE BUDGET . PROBLEMS MULTIPLY THE DOMINO EFFECT HAPPENS NURSES GO ,HOSPITALS GO WITHOUT MONEY; MONEY HAS TO BE SPENT ON OTHER ISSUES THAT DEEM IMPORTANT, CHILDREN DIES, ELDERLY PEOPLE DIES FOOD SHORTAGES OCCUR BOOKS ARE NOT DELIVERED. MANY THINGS ARE DERIVED FROM THESE INADEQUACIES CAUSED BY THESE THIEVES. THERE IS NO VICTIMLESS CRIME IN SKULDUGGERY THERE IS NO INNOVCENT ACT IN PIRACY BY DIFFERNT MODES ALL THE SAME THINGS OCCURRS IF THEY WERE DONE BRAZENLY OR BY STEALTH. WHEN NIGERIANS TOOK SHELL OR ONE OF THE AMERICANS TO COURT IN THE USA EVEN THOUGH NIGERIAS CASE WAS FLAWLES THEY RULED FOR THE CORPORATION WHY?? THEY PAY LOBBYIST BILLIONS THAT THEY ROB PLUNDER FROM THE MOUTHS OF THE INNOCENT. THEY FACE NO JUSTICEW THEY PAY FOR THE RIGHT TO BE CRIMINALS. THEY STRENGTHEN THE LAWS OF CRIMINALITY TAKING EVERYONE FOR A FOOL. THE UN IS A GREAT EXAMPLE LOOK AT HAITI, MILLIONS OF PEOPLE GTO TOGETHRE ROUND THE CLOCK WHEN THEY HAS THIER TRAGEDY LITTLE CHILDREN IN BANGLADESH WERE SNDING MONEY DO YOU NOT WHAT THIER CURRENCY IS WORTH ? NOT MUCH! BUT YOU KNOW WHAT IT WAS NOT ABOUT THE MONEY IT WAS THE FACT THEY WANTED TO HELP!!!!!! THEY SHOWN GREAT HUMANITARIAN CHRACTER UT THEY WERE NOT TO BE REWARDED THE USA STEPPED IN WITH MILITARY BULLYISM STOPPING THE FLOW OF DOCTORES AND MUCH MORE DECIDING THIS WAS THERE AFFAIR LONGSIDE THE UN . THIS AFFAIR WAS REVERTED FROM TRAGEDY TO MONEY ENTERPRISINGTHEY THEN PERPETARTED A GREAT SWINDLE AND FRAUD OF ALL MOMNIES DESTINED FOR HAITIS REBUILDING . THIS WAS ONE OF THE EARTHS MOST BRAZEN BULLY TACTICS WITH AIRCRAFT CARRIERS SENT TO THE REGION AIRPLANES BANNED FROM LANDING AND GUNS BEING DISPLAYED WITH IMPUNITY BY US AND UN WAR MONGERS. THEY WENT ON TO HOLD FRAUDULENT ELECTION TREATING THE BLACK PEOPLE LIKE ANIMALS. AFTER IT WAS LEARNED THAT THE UN SOLDIERS HAD INFECTED THE PEOPLE OF HAITI WITH CHOLERA ,IN THE MIDDLE OF THIS EPIDEMIC BANK MOON SAW FIT TO HOLD ELECTIONS. THEN THEY AGAIN COLUDED TO ROB PLUNDER ALL THE MONIES THAT WERE MADE AVAILABLE THT COULD HAVE BUILT HAITI FROM TOP TO BOTTOM WITH MESSENTIAL PLUMBING SEWAGE SYSTEM WASTE PLANTS ETC, WITH THE TREMENDOUS AMMOUNTS OF FUNDS CAME IN. WHAT THEY DID WAS TO BRING THOUSANDS OF "NO GOOD OFFENDERS" (NGOs) WHO PROCEEDED TO FIND JOBS IN HAITI PAYING THEMSELVES EXUBERANT FEES. THE AMERICANS STOLE THE LIME LIGHT AND STOLE THE CASH THEY HAD TO PAY THE MILITARY FOR THIER TIME NO ONE ASKED FOR THE MILITARY YET THEY GOT PAID. THE CUBANS WHO ARE GREAT SOCIALIST GREAT PRINCIPLED HUMAN BEINGS THEY HAVE MORE DOCTORS AND ENGINEERS THAN ANYONE ELSE , THEY WERE IN HAITI IN A FLASH AS THIS WAS A CARRIBEAN AFFAIR .HOWEVER THE WEST BLOCKED THE CUBANS WHOM SAUGHT NO MONEY AS THIS WAS A TRAGEDY, THIS SHOWED TO THE WORLD HOW THEY LOOK AT THE LIVES OF BLACK PEOPLE HAITI LOOKS NO DIFFERNT THAN WHEN THE EARTH QUAKE TOOK PLACE YEARS AGO THE DISEASE IS STILL RAVAGING THE PEOPLES LIVES . THIS SI WHAT TYPE FO PEOPLE THSI WORLD IS BEING RUN BY IT IS TIME FOR AFRICA TO REALY WAKE UP!!! THE UN BECAME LOOTERS AND SWINDLERS NOT PROVIDING SAFETY AND SHELTER 'INSTEAD TOOK MANY LIVES. AS WE SEE AROUND THE WORLD THE BLACK MAN HAS THE LOWEST OF EXPECTANCY AS FOR LIFE. THESE THINGS MUST BE ABOLISHED THE UN HAS BEEN VERY INAFFECTIVE IN AFRICAN AFFAIRS CONGO IS THIER BIGGEST FAILURE , FOR THE AMMOUNT OF YEARS THEY HAVE BEEN IN CONGO THE LIVES OF PEOPLE ARE NOT IMPROVING SIGNIFICANTLY; IN CONGO WE SHOULD HAVE ALSO SEEN SOME OF THE EARTHS BIGGEST DIAMOND OR GEMS BLACK RETAILERS . CONGO SHOULD HAVE BEEN SUPPLYING POWER TO MOST OF AFRICA A LONG TIME AGO. WHAT WE HAVE IN CONGO IS THE HTEFT AND FRAUD OF GEMS BEING EXTRACTED FROM THE NATION. MULTI NATIONALS KEEP THE BIGGEST PARTS OF THIER EARNINGS LEAVING JUST ENOUGH FOR THE PRESIDNT AND HIS CRONIES. CONGO SHOULD BE FACT BE THE MOST EXPENSIVE THE RICHEST PALCE ON EARTH . INSO SAYING CONGO WAS APLACE OF GREAT BEAUTY AND POER WITH BIG CIVILIZATIONS CENTRAL AFRICA WAS REKNOWNED FOR THIER GREAT INTELLECT AND THE COMMAND OF SCIENCE MATHEMATICS. WE CAN NOT JUDGE ANY AFRICAN NATIONON THIER PERFORMANCES AS WE KNOW COLONIALIST SPLIT UP AFRICA AS IF THEY WERE SPLITTING UP A PIECE OF CAKE NOT THE LIVES OF PEOPLE. THEY PUT PEOPLE AGAINST EACH OTHER EMPOWERING THOSE WHO WERE NOT READY TO LEAD AND FORCING THOSE NONCOMLIANT INTO SLAVERY. THRE AFTER THEN KEEPING CHILDREN MISINFPORMED UNDEREDUCATE NO EDUCATION EXCEPT BRAINWASHING PRETENDING AN LOOKING FOR PIETY AS IF THEY WERE GODS. THESE PEOPLE HAVE TRULY MADE A MUSH OUT OF CIVILIZATION. WHAT WE NEED TO DO IS TRULY MAKE SINCERE EFFORTS TO EM[POWER THE PEOPLE WITH GREAT EDUCATION THIS IS VERY IMPORTANT NO MATTER THE TIME THESE THINSG HAVE TO EB DECREED. ALL THOSE WHO EMBARK ON CRIMINAL ACTIVITY WITH THIER MATES FROM EUROPE AND AMERICA SHOULD BE SHOT FOR ABUSE ESPIONAGE TREASON AND THE REST. THIS SWINDLING AND CORRUPT PRACTISES ARE DISTRESSING MANY LIVES. THESE GRREDY CUTTHROAT PLUNDERERS WHO COME INTO AFRICA DO NOT REALISE HOW MUCH THEY DAMAGE THE LIVES OF SO MANY PEOPLE . WHAT THEY DO IS AKIN TO THE BOMBINGS THE REFUGEE CRISISES THE CONFLICTS WITH GUNS AND AMMUNITION, THERE IS NO DIFFERNCE BETWEEN PIRACY BY THEFT AND CONFLICT BY PHYSICAL ALTERCATIONS"!!!!! WE NEED TO HAVE ECONOMIT WITH STRONG DEGREES WHO ARE WORKING FOR ONE INTERST THE MANAGARIAL FINANCES REVUNUE OF AFRICA. THERE MUST EB ACCOUNTABILITY FOR THESE THIEVES THEY DO NOT GO TO PRISON THEY ARE A MERCILESS LAW UNTO THEMSELVES. AMERICA IS THE BIGGEST SUPPORTER ALONG WITH THIER ALLIES IN NATO. FOR AFRICA TO TRULY SEEITS ECONOMIC SUBSTANCE THE ECONOMIES MUST MERGEWITH UNSELFISH IINSTITUTIONS THAT WILL BENIFIT ALL ARICANS .
IT IS TIME FOR AFRICA AND AFRICANS TO START CATCHING THOSE CRIMINALS AND PUBLICLY SHOW THEM OUT TO THE WORLD. THESE ARE SOME OF THE SAME DESTRUCTIVE PEOPLE WHO CONTINEOUSLY WANT TO SEE THE UNDER-DEVELOPMENT OF AFRICA AND HER CHILDREN JUST FOR THEIR SELFISHNESS AND LAVISH LIFESTYLES.