Friday, 20 March 2015

Africa Loses US$60 Million Per Year Through Illicit Financial Flows

Dr. Tigere Chagutah
By Paul Shalala

A recently released report by the African Union (AU) and the United Nations Economic Commission for Africa (UNECA) has revealed that Africa loses up to US$60 billion per year through illicit
financial flows.

The AU/UNECA Report on Illicit and Financial Flows from Africa was released in January this year.

It was prepared by the High Level Panel on Illicit Financial Flows from Africa under the theme “Track it, Stop it, Get it” and it paints a glaring picture on the weak governance and regulatory frameworks on the continent.

Oxfam Pan Africa Campaigner Dr. Tigere Chagutah, who shared the findings in Lusaka at the ActionAid-organised meeting yesterday, said Africa suffered the largest illicit financial flows as a share of its economy which averaged 5.5% of its Gross Domestic Product (GDP) per year for the decade 2003-2012.

“There is a shadow global financial system were illicit financial flows move from one area to the other. In Africa, factors that have made this situation worse include poor governance, weak regulatory structures and double taxation agreements,” said Dr Chagutah, who is based in Johannesburg, South Africa.

According to one of the charts Dr Chagutah unveiled from the report, Zambia is affected by illicit financial flows to levels of 16% of its Gross Domestic Product which is one of the highest in the world.

He called on the overhaul of legal frameworks to curb illicit financial flows if the continent is to gain from its own resources.
Pamela Chisanga

“Multi-national companies employ well learned lawyers to specialise in tax avoidance which is not a crime. These are the practices that are affecting Africa today,” he added.

And ActionAid Zambia Country Director Pamela Chisanga said there was need for political will to fight illicit financial flows from Africa.

“There is need for political will in this fight. Investors must come and invest and better our lives and communities. We do not need exploitation,” said Ms Chisanga, who is also an outspoken social media critic on the impact of what she terms “bad” foreign investment in Zambia.

“40,000 villagers were relocated in Solwezi to pave way for huge mines but only 4,000 jobs were created for the locals. We don’t need to defend such activities, its sad.”

Financial Intelligence Center Chief Executive Officer Mary Nakazwe said there is a tendency among some investors in Zambia to practice tax evasion and pretend its tax avoidance which is not a crime.

She said her agency, which is part of the Ministry of Finance, had handled such cases and handed them over to the law enforcement agencies for possible prosecution.

Meanwhile, Norwegian Ambassador to Zambia Arve Ofstad says there is need to curb all illegal businesses that deny people of the much needed development in their countries.

Mr Ofstad says his country funded the establishment of the Financial Intelligence Center in Zambia as a way of fighting the flow of illicit money out of the country.

Front cover of the report
”The headquarters of the EITI (Extractive Industry Transparency Initiative) is now in Norway, we have funded many researches and commissions on illicit financial flows and we funded the establishment of Zambia’s Financial intelligence Center. This is part of our efforts to fight illegal business practices,” he said.

Meanwhile, two lawmakers who attended the meeting expressed shock at the revelations from the AU/UNECA report but they called for action to stop illicit financial flows out of Zambia.

“This information you have shared is very vital. These are the things we need to know as MPs. I urge ActionAid to further take this report to the executive and technocrats so that action can be taken on these matters,” said PF Nchelenge MP Raymond Mpundu.

“In these matters, the executive is very scared to take action. They think investors will run away. They know where the problem is but they fear to act. Why fear investors?” said UPND Mbabala MP Ephraim Belemu.

The meeting was attended by representatives from the civil society, media and members of parliament.

No comments:

Post a comment