ILLICIT financial flows could stifle Africa’s quest to achieve the Sustainable Development Goals (SDGs) by the year 2030, a UN official has warned.
Aida Opoku-Mensah, a special adviser on SDGs to the UN Economic Commission for Africa (UNECA), told Chinese news agency Xinhua in Nairobi that the continent loses about $50bn in tax revenues siphoned annually to offshore locations.
‘This continued loss of resources is undermining Africa’s efforts to fund implementation of the SDGs,’ Opoku-Mensah said during the Fifth Pan African Conference on Illicit Financial Flows and Tax 2017.
The two-day event brought policymakers and civil society representatives from the continent to review ways to stem illicit financial flows from Africa.
One of the principles of the SDGs is reliance on domestic resources and not foreign aid in order to improve chances of achieving the targets.
Opoku-Mensah said illicit financial flows tend to narrow Africa’s resource base and deny the continent much needed finance required to meet the 17 SDGs.
UNECA said most of the illicit financial flows are undertaken by multinationals that operate in Africa.
‘These transnational firms engage in transfer pricing, trade misinvoicing, tax avoidance and evasion in order to lower their tax liability to African states,’ Opoku-Mensah said.
She noted that the mining sector is the most affected by illicit financial flows.
‘This is because most mining contracts are undertaken in secrecy and so government doesn’t get their rightful share of royalties and profits,’ she added.
Opoku-Mensah said African governments can eliminate illicit financial flows by strengthening their tax administrations so that they can detect incidences of tax evasion and avoidance.