Taming Illicit Financial Flows in Africa
It is estimated that about $90 billion is lost annually to illicit financial flows in Africa, enabled by trade mis-invoicing, tax evasion among others, and Nigeria alone reportedly accounts for 20 per cent of this figure. Ugo Aliogo examines the drawbacks
In 2022, the Director of the Centre for Democracy and Development (CDD), Idayat Hassan, said the Illicit Financial Flows (IFFs) in Africa rose to $80 billion. Hassan said the African continent suffered an annual loss of over $50 billion as at 2015 through IFFs, which had since risen due to non-practical action on it.
According to her, it is pertinent to note that through corruption and mismanagement, some of the COVID-19 funds in Africa may have become a source of illicit financial flows.
She commended all African countries that have signed and ratified the African Union Convention on Preventing and Combating Corruption (AUCPCC), which was adopted in Maputo, Mozambique on July 11, 2003, and came into force in 2006.
She also lauded the countries that have enacted laws and created independent anticorruption agencies to tackle corruption.
She espoused that CDD urges all states to work towards complying with the provisions of the AUCPCC and indeed other similar multilateral instruments such as the UNCAC, as well as relevant international resolutions.
Experts have argued that Nigeria loses about $18 billion annually to illicit financial flows. This reportedly accounts for about 30 per cent of Africa’s loss to the IFFs, while the Independent Corrupt Practices and Other Related Offences Commission (ICPC) pegged the figure at $10 billion.
The Chairman of the Independent Corrupt Practices and Other Related Offences Commission (ICPC), Prof Bolaji Owosanoye, said the failure of member states to tackle corruption was behind unconstitutional change of governments in the sub-region.
AFDB’S EFFORTS
The Deputy Director-General for Eastern Africa Regional and Business Delivery Office at the African Development Bank (AfDB), Abdul Kamara, expressed satisfaction with the project, noting that it is in line with the high-level panel’s mandate to promote a coordinated response of the bank’s regional member countries in ensuring that policies and practices are mobilised in addressing financial crime, tax avoidance, money laundering. (CoDA) recently launched a three-year support project to improve regional coherent and coordinated response to illicit financial flows.
The project would help African stakeholders to actively engage in stemming such flows to improve domestic revenue mobilisation on the continent.
The project aims to improve regional coordination of combating illicit financial flows and the oversight and accountability of public finances, for optimal revenue mobilisation and management in African countries.
It revealed that the project would support the coordinated implementation of recommendations of the high-level panel on Illicit financial flows and the implementation of joint strategies and initiatives related to international taxation.
The grant would support CoDA in its role as the secretariat of both the AU High-Level Panel on IFFs, the Joint Secretariat of the Consortium to Stem
IFFs from Africa, and the annual African Fiscal Policy Forum.
ICPCS’ ROLE
In its quest to find a lasting solution to this unpleasant phenomenon, the ICPC is beaming its search light on areas that are prone to IFFs such as tax avoidance, tax evasion, base erosion and profit shifting.
The commission has initiated a system study and review of the IFFs in the oil and gas, and as well as tax sectors. It has also constituted IFFs/Tax Fraud Group to address the menace.
ICPC has hosted four international conferences to sensitise Nigerians, Africans and the world on the ills of IFFs and how to collectively work together to stop/combat the menace.
The commission has also scaled up its operations in profiling all companies mentioned in petitions to the Commission to ensure that they are not in any way short-changing the nation.
Leveraging on two aspects of its threepronged mandate of prevention and public education, ICPC is re-awakening the consciousness of Nigerians by stimulating dialogues and conversations among critical stakeholders, because public awareness is a key tool in fighting against evolving illicit financial operations.
As part of its efforts to block the loopholes through which funds are ferried out of the country, the Nigerian government in 2019, set up an Inter-Agency Committee on Stopping IFFs with ICPC as the secretariat.
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