CoDA: US $ 50 Billion Siphoned out Africa Illegally Every Year
By Michael Ouma
ADDIS ABABA--Billions of dollars have left Africa in dubious circumstances from 2000 to 2008, with experts stating that the funds could be as high as US $ 50 billion every year during the period under review.
Details about the funds, also known as illicit financial flows (IFF), are contained in a yet-to-be-released report titled “Illicit Financial Flows from Africa: Scale and Developmental Challenges” which accuses multinational corporations of economic sabotage, by “perpetuating Africa’s economic dependence on other regions.”
The report is being reviewed by the High-Level Panel on Illicit Financial Flows from Africa chaired by former South African president Thambo Mbeki. The panel is expected to recommend appropriate policies to counter the phenomenon and seek repatriation of the stolen moneys back to the continent.
Mr Yinka Adeyemi, UNECA’s head of the information and communications services said during the Coalition on Dialogue on Africa (CoDA) debate on ““Leveraging State-Society Dialogue for Improving Natural Resource Governance in Africa” that the High Level Panel on Illicit Financial Flows from Africa is holding sub-regional consultations.
Mr Adeyemi added that UNECA has developed an advocacy strategy to track the illicit flows, stop the flow and get back the money to Africa using the panel’s tagline “Track it. Stop it. Get it.”
The report notes that the trend of illegal financial flows from Africa has been increasing over time and especially in the last decade, with an annual average illicit financial flow of $ 50 billion between 2000 and 2008 against a yearly average of only $ 9 billion for the period 1970-1999, with two-thirds of the outflows being attributed to only two regions - West Africa and North Africa with 38 per cent and 28 per cent respectively.
Each of the other three regions (Southern, Eastern and Central Africa) registered about 10 per cent of total Africa’s illicit financial flows mainly due to lack of data and poor quality of available data.
Adeyemi added that the report identifies the sources, challenges and current policy responses to illicit financial flows from Africa and goes ahead to propose a raft of policy options to effectively address this issue at the national, regional, and global levels.
At the national level it proposes the creation of disincentives to trade mispricing; the development and implementation of effective capital repatriation schemes; the strengthening of regulatory frameworks.
At the regional level, it calls for strengthening of the stolen asset recovery regime; and the development of an effective regional advocacy and sensitization strategies; while there is need to support and expand specific initiatives and conventions against illicit financial flows, the report stipulates.
The High Level Panel aims to undertake extensive and in-depth studies to shed light on the extent and ramifications of illicit financial flows on national economies as well as on the human impacts of the phenomenon.
Another regional initiative established to aid in the fight against illicit financial flows from the continent is the African Regional Anti-corruption Programme (2011-2016), established by the UNECA and the African Union’s Advisory Board on Corruption (AUABC).
Speaking at the same session Mr Antonio Pedro, UNECA’s director of the Rwanda-based sub-regional office for Eastern Africa said that the extractive industries in Africa have little linkages to other sectors of the economy, indicating that even though there is a high foreign direct investment in the sector, "there is no reflection on development outcomes."
Mr Pedro said that even though the Extractive Industries Transparency Initiative (EITI) has been adopted by most African countries, it needed to be domesticated by these countries, noting that it is important for African countries to invest in other sectors of the economy apart from mining as natural resources are non-renewable.
He added that countries must address the “enclave nature of mining by using mining rents to develop other sectors of the economy” noting that “conversations on mining shouldn't be between only governments and the companies, but should involve other stakeholders like the media.”
CoDA was held as pre-event activity before the eighth session of the African Development Forum (ADF VIII) which is being held in Addis Ababa from October 23 to 25 2012, under the theme: "Governing and Harnessing Natural Resources for Africa's Development." The ADF VIII is jointly organised by UNECA, the African Union and the African Development Bank.