31 March 2014

Africa Loses N10 Trillion to Illicit Financial Flow Yearly

Former South African President, Mr. Thabo Mbeki has said that African countries lose about N10 trillion ($50 to $60 billion) yearly through illicit financial flows (IFF) from the continent.

Mbeki made the revelation yesterday while presenting Progress Report of the High-Level Panel on Illicit Financial Flows, at the concluding sessions of the 7th AU-ECA Conference of Ministers of Economy and Finance, in Abuja.

According to him, the huge sums did not include capital flight, saying that it came from proceeds of commercial transactions through multi-national companies, criminal activities and corruption.

He said: "In terms of the phenomenon of mis-pricing, the estimates are between 50 and 60 US dollars that the continent looses as illicit financial flows, capital flight is not included.

"In order to understand the impact of this phenomenon on Africa, we decided that we carry out a number of country case studies in Nigeria, Democratic Republic of Congo, Kenya, Liberia, Mozambique, Algeria, Mauritius and South Africa."

The former president is the Chairman of the panel set up by the Economic Commission for Africa (ECA) in 2012, to look into the nature of illicit financial flow from the continent.

Mbeki lamented that the monies that would have been used to provide infrastructure and social amenities for the poor African population were transferred to other countries and left the continent in poverty.

He added that the situation was occasioned by weakened tax regime of some countries in the continent, adding that proper mechanism needed to be in place to check the trend.

Mbeki said the study was to enable the panel draw up a comprehensive report generally on the continent as it was not possible for them to prepare a country-by-country report.

He also said that the panel's findings showed that the main beneficiaries of IFFs from African countries were developed countries and emerging economies, which were Africa's major trading partners.

According to him, illicit financial flow has posed developmental challenges on the continent, in terms of draining hard currency reserve, reduced tax collection, deepening income gap, depleting investment and weakened governance.

Nigeria's Minister of Finance Dr. Ngozi Okonjo Iweala in her contribution said: "There is an African Vioce on this issue. Final report must be clear that first in stopping IFF is by Africans."


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