Tackling Africa’s Illicit Financial Flows



Idayat picture 2Trust Africa, Centre for Democracy and Development West Africa and Third WorldNetwork-Africa hold a Consultative Roundtable on Illicit Financial Flows

Trust Africa, Centre for Democracy and Development (CDD) and Third World Network Africa, held the first day of the two-day Consultative Roundtable on ‘Mending the Leakages: Africa’s Battle against Illicit Financial Flows,’ at Sheraton Hotel Abuja, Nigeria on March 25, 2014.

The meeting which was attended by policy makers within governments and multi-lateral institutions, researchers, activists from within civil society organizations and social movements, security sector, the diplomatic corp and media, deliberated on Mending the Leakages: Africa’s Battle against Illicit Financial Flows (IFFs).

In his keynote address, Dr Jibrin Ibrahim observed that until recently, there had been no debate about illicit financial flows. He said that the problem was not only massive and illegal, but also deterred economic growth and development. He lamented the fact that Nigeria had lost approximately $400 billion since independence in 1960, a development which, according to him, was a reflection of, and explanation for our current situation as a nation. Citing various examples from the Nigerian experience, he noted that such a huge amount could be used to transform the nation, especially in the provision of the infrastructural foundations of human security and development. Dr Jibrin also said that IFFs were orchestrated at the apex of government; hence the need for new and creative ways of arresting the tide. In his final summation, Dr Ibrahim condemned the usual issuance of a communiqué at the end of conferences like this, which repeatedly emphasized the same points over and over, with little or no positive change. He, therefore, called for a new approach predicated upon popular mobilization for revolutionary actions against all forms of IFFs. In his words: ‘I reject your communiqué unless you are going to say it categorically that African Presidents are thieves looting the treasury and that the population be mobilized along revolutionary paths to get the looters out of power’.

In her own remarks, Ms. Idayat Hassan, Director of CDD posed the question whether Africa was really rising as often claimed in official circles, noting that such statistics do not reflect the true condition of the people who encounter diverse forms of deprivations on daily basis, including excruciating poverty, rising unemployment and systemic corruption. She noted that the objective of the meeting was to expand and deepen knowledge on IFFs, broaden perspective, as well as to develop and improve capacity to engage the process. This is important in the context of the post-2015 development agenda.

Also making his remarks, Tendai Murisa, acting director of programs, Trust Africa noted that while this could be Africa’s century, there was need to address the challenges of IFFs. He painted a gloomy picture of the situation using relevant statistics, including the fact that Africa lost between $597 billion and $1.4 trrillion to IFFs between 1980 and 2009; and that the ratio of IFF to GDP was worst in Africa compared to other regions of the world. He identified notable forms or snapshots of IFFs as corruption; criminal activities such as smuggling and drug trafficking; and commercial tax evasion. He identified the drivers of IFFs to include global economic policy regimes and weak regulatory capacity of African states. He, therefore, called for coherent steps to fight IFF and a spirit of pan-Africanism. Mr Murisa suggested solutions to the problem in line with the Trust Africa’s approach, including building effective reform advocacy for accountable government, strengthening researchers to expand the frontiers of knowledge on the problem, empowering civil society in terms of access to relevant information/data and promoting African regional collaboration in tackling the problem.

The first panel, themed International Finance and Illicit Flows, featured presentations by Gyekye Tanoh, Dayo Olaise and Brian Kagoro. Tanoh raised crucial issues such as the heavy dependence on primary commodity, low productivity, poor pricing regime, unfavorable terms of trade, financialisation and now land grabbing as parts of the problems confronting Africa. Olaide addressed the role of private finance in development assistance, drawing on lessons from the privatization programme in Nigereia to underscore the positive and negative dimensions of private finance in the development process. On his part, Kogoro emphasized the dynamics of the global system of capital formation and utilization that is heavily tilted against Africa. He also stressed the need to understand the contradictions of international aid flows, identifying the form and character of debt servicing as a form of IFFs from Africa. The panel advocated the need to restructure the production process, strengthen the capacity to formulate and implement regulatory frameworks, build state capacity and competence and promote mechanisms for collective regional response.

The second panel on Natural Resource Extraction and IFFs by Dr Mamadou Goita and Dauda Garuba identified a close link between natural resources extraction and IFFs in Africa. Notable explanations for this, according to the panelists, included the lack of mining policies in the region, the dominance of concessional contracts instead of full production contracts, institutional and capacity gaps in the formulation and execution of contracts, poor regulatory and control systems, stagnant position of Africa in the value-chain of mineral extraction the primacy of economic development at the expense of the cultural and social foundations of development. The panel called for collective regional framework of response and the development of a multistakeholder platform for managing natural resources.

The last session engaged specific issues in IFFs, including international fiscal regime and double taxation, transfer mispricing and tax havens, national tax regimes and abuses of tax incentives and the role of private sector in domestic resource mobilization. The panelists, namely Tetteh Hormeku, Alvin Musoma, Anomam T.O and Kojo Parris critically engaged these issues, underscoring their ups and downs as well as the way forward.

All sessions were well attended and generated intensive, but informed engagements by participants, who raised critical questions and comments to provoke further reflections and clarifications from the panelists. The meeting ended with the screening of documentary film on IFFs by Influence Africa.

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