One of the major obstacles to the development of the African continent is the massive loss of revenue from the extractive industries through corruption, tax evasion and other forms of illicit financial flows.
Mohammed Amin Adam, Executive Director of the Africa Centre for Energy Policy (ACEP), who made these known at the opening of an international conference on resource taxation in Accra last Thursday, therefore, urged African Governments to show commitment to blocking extractive sector revenue leakages and find innovative ways of maximizing mineral revenues before they were depleted.
Mr Adam also called for a more co-ordinated global approach to responding to multinational companies and collaborating governments perpetuating these practices, adding that Africa's natural resources such as oil, gas and solid minerals were important assets that should be transformed into development for the people.
He expressed displeasure about the decision of government to suspend the introduction of the proposed windfall taxes in the mining sector. "This is why I am not pleased about the decision of Ghana to suspend the introduction of the proposed windfall taxes in the mining sector. The argument by the government that the fall in mineral prices provides an inconvenient environment for the introduction of windfall taxes, and that this could affect investment attraction to the country, is fundamentally flawed," He said.
In a key note address on "Unlocking Africa's Development: Blocking Extractive Sector Leakages," Dr Kojo Busia, Snr. Mineral Sector Governance Advisor, United Nations Economic Commission for Africa (UNECA), Addis Ababa, noted that the challenge of containing illicit financial flows was a complex one that would require a multi-faced approach involving internal collaboration and the strengthening of governance institutions domestic accountability systems within African states and regional cooperation among African countries.
According to the World Bank's Stolen Asset Recovery Initiative, cross border flow of proceeds from corruption, tax evasion and criminal activities range between US$1 trillion and US$1.6 trillion annually.
Furthermore, the Christian Aid estimates that transfer pricing and falsified invoicing between unrelated companies alone cost developing countries tax revenues of US$160 billion annually which, by far, exceeds all the combined aid budget of all donor countries to the developing world.
A more recent data from the Global Financial Integrity released in 2013 has also exposed the extent of illicit financial flows in Africa between 2002 and 2011, with the first 30 countries out of 177 countries surveyed, showing three African countries-- Nigeria, South Africa and Sudan-- all resource rich countries, having lost US$26.9 billion to illicit financial flows over the 10-year period.
Again, in West Africa, a total of US$23 billion was lost over the same period while Ghana is reported to be the 7th in West Africa losing US$316 million over the period, meaning that since 2002 until 2011, Ghana has lost US$32 million annually to illicit financial flows and capital flight mostly from the mining sector.
It was in the light of these that the conference was organized by ACEP and IBIS Ghana to explore alternative options of defeating illicit financial flows and capital flight from Africa's extractive industries.
Source: ISD (G.D. Zaney)