Home Business & Economy Experts call for combined forces to stem illicit financial flows

Experts call for combined forces to stem illicit financial flows

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EXPERTS have called for combined forces to stem the illicit movement of money and capital from one country to another amid revelations that illicit financial flows from Africa were stifling the continent’s development progress.

Speaking at a high-level discussion during UN Economic Commission for Africa’s (ECA) Conference of Ministers in Addis Ababa, Ethiopia, early May, Abdalla Hamdok, the organisation’s Deputy Executive Secretary, said money illegally transferred across borders in addition to aggressive tax avoidance now amounted to a loss of $100bn annually for African states. He remarked, ‘I think the debate is not about the seriousness of the issue. The challenge is how we can arrest it.’  ‘This is an African problem. The only way we can resolve together is by working together with our partners,’ he added.

Nara Monkam, Research Director at the Africa Tax Administration Forum, shone a spotlight on the destination of funds and profile of those engaged in the transferring the money: ‘Some multi-national corporations employ tax evasion, trade mis-invoicing and abusive transfer pricing.’ According to the Director, inter-country co-operation at a continental level was required to tackle such practices. In addition, given that illicit financial flows from Africa involve actors from across the globe, and that the laws and policies of non-African jurisdictions have a serious impact on illicit flows from Africa, it has become a priority to review the adequacy of global frameworks in tackling illicit financial flows. Monkam also added there was also a need for greater funding for technical assistance on tax matters and improvements in tax administrations.

A call was also made to amplify advocacy for the return of illicit financial assets by Akingbolahan Adeniran, Rule of Law Advisor to the Vice President of Nigeria. He argued, ‘In the domestic setting, receiving a stolen asset is a crime. Why is receiving stolen asset from a victim country not a crime?’ In addition to the loss of finances for affected states, flows have a number of other negative effects, such as undermining governance, contributing to environmental degradation, skewing income distribution, deepening inequality, and exacerbating conflicts, particularly in resource-rich countries.

The commitment of governments was deemed crucial by Annet Wanyana Oguttu, a tax law expert at the University of South Africa, who called for political action to combat illicit financial flows. She said, ‘It all bogs down to political will,’ and added, ‘many African countries have been dragging their feet.’

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