Mbeki, Guebuza Hold Talks On Illicit Financial Flows in Africa

19 September 2013
press release

Maputo — Former President of South Africa Thabo Mbeki met with Armando Guebuza, President of the Republic of Mozambique to discuss illicit financial flows in Africa. Mr Mbeki who is Chair of the ten member High Level Panel on Illicit Financial Flows said illegal transactions out of Africa were the single economic issue hampering Africa's development.

It is estimated that Africa looses over USD$50billion a year in illicit financial, exceeding the official development assistance to the continent, which stood at US$46.1 billion in 2012. The illicit financial flows find their way to developed countries mostly through multi-national companies and subsequently draining the continent of the much needed resources.

Illicit financial flows constitute, among others, undocumented commercial transactions and criminal activities characterized by over pricing, tax evasion, false declarations, mispricing of trade exports and imports facilitated by some 60 international tax havens and secrecy jurisdictions that enable creating and operating of millions of disguised corporations, oil companies, anonymous trust accounts and fake charitable foundations. Other techniques used include money laundering, transfer pricing and corruption.

During the closed door meeting, President Guebuza was appraised on the work of the High Level Panel since its establishment and inauguration in February 2012 by the United Nations Economic Commission for Africa and the African Union to address the debilitating problem of illicit financial outflows from Africa.

The panel has held several consultations around the continent meeting with top government officials and other stakeholders. Previous meetings have taken place in Algeria, Democratic Republic of Congo, Kenya, Nigeria, Tunisia and Zambia.

During the two day consultative meeting in Maputo, Mr Mbeki is scheduled to meet with Government Ministers, top government officials, the private sector, civil society and other stakeholders to forge strategies on how to curb illegal money leaving Africa.

While illicit financial flows are a global problem, their impact on the continent is monumental thereby representing a significant threat to Africa's governance and economic development.

Current evidence shows that Africa lost over US$ 854 billion in illicit financial flows between 1970 and 2008 corresponding to a yearly average of about US$ 22 billion. In this period Mozambique is believed to have lost as much as USD25billion.

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.

These estimates may well be short of reality as they exclude such other forms of illicit financial flows from smuggling and mispricing of services.Some of the effects of illicit financial outflows are the draining of foreign exchange reserves, reduced tax collection, canceling out of investment inflows and a worsening of poverty. Such outflows also undermine the rule of law, stifle trade and worsen macroeconomic conditions.

Mr Mbeki will hold a press conference with the media on Friday, 20th September at 12h00.

Issued by:

ECA External Communications and Media Relations Section

PO Box 3001

Addis Ababa

Ethiopia

Tel: +251 11 551 5826

E-mail: ecainfo[at]uneca[dot]org

www.uneca.org

AllAfrica publishes around 500 reports a day from more than 100 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.