20 January 2014

Nigeria: Okonjo-Iweala, Yuguda Harp On Stoppage, Repatriation of Stolen Funds

The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala has said Africa required more commitment from the international community to help recover a significant amount of stolen assets stashed away in foreign accounts by looters. She also said there was the need to intensify efforts towards the mobilisation of domestic resources and close existing gaps in the tax system as way of seeking innovative finance for development initiatives.

At a different forum, she suggested that African governments and politicians must devise ways of funding their elections in such a way that state funds are spared, noting that the failure to have a clear-cut funding mechanism for elections was the root cause of some of the corruption on the continent.

Okonjo-Iweala's plea came on a day the supervising Minister of National Planning, Mr. Bashir Yuguda, called for a global action on illicit financial outflows from Africa, which is estimated at about $50 billion annually.

Speaking at the weekend, in Abuja, at the opening of the 12th Plenary Session of the Leading Group (LG) on Innovative Financing for Development, which was organised by the National Planning Commission (NPC) and the LG, the minister stressed the need to harness the potentials of Nigerians living in the Diaspora in order to boost remittances into the country.

To this end, she reaffirmed that a Diaspora bond of between $100 billion and $200 billion would be floated by the federal government this year to support infrastructure development. She said: "Across the globe, efforts are increasingly focused on innovative ways in financing development. For me, the first innovative financing that we need to look at is how to mobilize domestic resources of countries and it is important to think about this.

"In Nigeria here, we find out that there is significant gap between us and other emerging market countries. Many of us our tax to GDP ratio is below 15 percent, if you look at the emerging markets tax to GDP ratio is in the mid 20s and for OECD countries it's about 33 per cent and up. And so there is a significant gap in terms of our tax efforts that we could tap into for financing."

However, Yuguda, in his remarks, said:"The Leading Group should collaborate with the panel and other relevant organisations in addressing this threat because of its damaging impact on development."

According to him, statistics had shown that illicit financial flows from Africa alone was twice the amount of Official Development Assistance (ODA), which is extended to the continent in one year.

He further called for the development of partnership between the public and the private sector which, according to him, would help to mobilise more financial resources for development. The minister said the LG would need to focus more attention on the imperative of strengthening measures against illicit capital flight and tax avoidance, especially now that the world seem to be paying attention to the menace-with the setting up of the High Panel on Illicit financial flows from Africa under the Chairmanship of Mr. Thabo Mbeki, former president of South Africa. Nigeria, through the National Planning Commission, was elected presidency of the LG at the 11th Plenary held last year in Helsinki, Finland Republic.

Meanwhile, Okonjo-Iweala, in far away South Africa, has challenged African nations to evolve a transparent and clear-cut election financing mechanism. The minister stated that election financing devoid of clear-cut mechanism is of one of the root causes of corruption, "which we don't usually talk about very much."

In an address she presented at the TEDxEuston forum in South Africa recently, she said most Africans now prefer multi-party democracy, which called for the conduct of elections. "Now, I want to delve into one more aspect which is also an important issue. That is an aspect of one of the underlying sources or roots of corruption, which we don't usually talk about very much. I want the young people on the continent to truly think about it, it is about how we finance our democracy and finance our elections.

"We all want democracy in our countries; we have worked very hard on the continent to have this. So many countries now practise multi-party democracy; we now conduct elections. It's the only form of governance that can allow a voice for the people.

"Have you ever thought of how elections are financed? No country has been able to crack this problem. In the US they have conversation about campaign finance and they've tried to reform it; they've got a system, but I'm sure they will admit it's not perfect; even in the United Kingdom (UK) and so many other countries. But at least they are having a conversation about it, isn't it? And they are talking about what to do to make it better," she said.

"To me one of the root causes of corruption on the continent is the way we finance or do not finance elections properly. We have adopted systems that demand that politicians campaign, haven't we? Campaigns cost money. But where does that money come from?

"If we don't find a legitimate means of supporting campaigns, then all sorts of ways are found to do this. It could be, as I said before, engaging business people who support an individual, a system or a party and then later on, they have to be rewarded through contracts or other means that may actually not help but undermine the economy and development," she said.

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