In the last 50 years Africa has lost more than $1 trillion in illicit financial flows which include criminal activities like drug and human trafficking, animal poaching, theft of oil, corruption and unethical business practices by multinationals.
The figure as recently quantified by African Union’s high level panel on illicit financial flows indicate that on average Africa loses more than $50 billion dollars every year to this illegal flows, denying the continent the much needed capital to tackle some of its most biting problems like poverty and underdevelopment.
In fact according to the Africa Development Bank, Africa needs approximately $50 billion each year to address its infrastructure needs, money it would easily find if such illicit flows were nipped in the bud.
Multinationals have been accused of fanning the unethical behaviour, from the timber sales in Mozambique and Liberia, the mineral production in DR Congo and export of crude oil in Nigeria. At the heart of this, is transfer pricing and profit shifting which ensures that these companies are able to hide revenues therefore absconding their fiduciary duty of paying taxes.
Former South African president Thabo Mbeki who chairs the African Union panel on illicit financial flows captured it aptly when addressing Pan African parliament.
“The information available to us has convinced our panel that large commercial corporations are by far the biggest culprits of illicit outflows, followed by organized crime. We are also convinced that corrupt practices in Africa are facilitating these outflows, apart from and in addition to the related problem of weak governance capacity.”
The tough economic times and the changing global geopolitics mean that donor countries are scaling back funding to African countries. This therefore portends that Africa has to look inwards to finance its needs, which it comfortably can.
But it has to make some bold and unpopular decisions including strengthening institutions that can track where these resources are being lost, and passing tough legislation to net and severely punish offenders, irrespective of their stature. It also calls on African leaders to pile pressure on their international partners to assist in this war. Most of the illicit finances end up in havens like Panama and British Islands.
Nigeria’s president Muhammad Buhari made one such bold step when he visited former British Prime Minister David Cameron and urged him to assist him recover money that had left Nigeria illegally and was stashed in UK.
It is indeed a war that requires concerted effort, but one that Africa should be willing to actively take up for the sake of its people.