Stem Illicit Financial Flows – Experts

UN Economic Commission for Africa’s (ECA)

Experts have called for collaboration to stem the illicit movement of money and capital from one country to another amid revelations that illicit financial flows from Africa are stifling the continent’s development.
Speaking at a high-level discussion during the UN Economic Commission for Africa’s (ECA) Conference of Ministers, 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 $100 billion annually for African states.

He remarked that “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 the problem together is by working together with our partners.”

Dr Nara Monkam, Research Director at the Africa Tax Administration Forum, put the spotlight on the destination of funds and profile of those engaged in the transferring the money.

“Some multinationals employ tax evasion, trade mis-invoicing and abusive transfer pricing.”

According to the Director, inter-country cooperation 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.

Dr Monkam also stressed the 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.
Professor Annet Wanyana Oguttu, a tax law expert at the University of South Africa, said, “It all bogs down to political will, and many African countries have been dragging their feet.’

The event also saw the launch of two ECA publications, “A Study on the Global Governance Architecture for Combating Illicit Financial Flows and Base Erosion and Profit Shifting in Africa: Reforms to Facilitate Improved Taxation of Multinational Enterprises.