fbpx

Illicit capital robbing Africa and its people of their future: UN trade and development chief

Illicit capital robbing Africa and its people of their future: UN trade and development chief

Facebook
Twitter
LinkedIn
Email
Print

Every year, an estimated $88.6 billion, which is equivalent to 3.7% of Africa’s GDP, leaves the continent in the form of illicit capital, according to UN trade and development agency UNCTAD’s Economic Development in Africa Report 2020, launched on Monday.

NEW YORK, USA, September 29, 2020,-/African Media Agency (AMA)/- Illicit financial flows (IFFs) are movements of money and assets across borders which are illegal in source, transfer or use, according to the new report entitled “Tackling illicit financial flows for sustainable development in Africa.”

It shows that these outflows are nearly as much as the combined total annual inflows of official development assistance, valued at $48 billion, and yearly foreign direct investment, pegged at $54 billion, received by African countries – which represents the average investment between 2013 to 2015.

“Illicit financial flows rob Africa and its people of their prospects, undermining transparency and accountability and eroding trust in African institutions”, said UNCTAD Secretary-General Mukhisa Kituyi.

These outflows include illicit capital flight, tax and commercial practices like mis-invoicing of trade shipments and criminal activities such as illegal markets, corruption or theft, says UNCTAD. 

From 2000 to 2015, the total illicit capital flight from Africa amounted to $836 billion. Compared to Africa’s total external debt stock of $770 billion in 2018, this makes Africa a “net creditor to the world”, the report says.

IFFs related to the export of extractive commodities ($40 billion in 2015) are the largest component of illicit capital flight from Africa.

SDG progress at risk

IFFs represent a major drain on capital and revenues in Africa, undermining productive capacity and Africa’s prospects for achieving the Sustainable Development Goals (SDGs).

For example, the report finds that in African countries with high IFFs, governments spend 25% less than countries with low IFFs on health, and 58% less on education. Since women and girls often have less access to health and education, they suffer most from the negative fiscal effects of IFFs.

Africa will not be able to bridge the large financing gap to achieve the SDGs, estimated at $200 billion per year, with existing government revenues and development assistance.

Infrastructure, services suffering

The report finds that tackling capital flight and IFFs represents a large potential source of capital to finance much-needed investments in, for example, infrastructure, education, health, and productive capacity.

Sierra Leone for example, which has one of the highest under-five mortality rates on the continent, curbing capital flight and investing a constant share of revenues in public health could save an additional 2,322 of the 258,000 children born in the country annually.

In Africa, IFFs originate mainly from extractive industries and are therefore associated with poor environmental outcomes.

The report shows that curbing illicit capital flight could generate enough capital by 2030 to finance almost 50% of the $2.4 trillion needed by sub-Saharan African countries for climate change adaptation and mitigation.

All that glitters

The report’s analysis also demonstrates that IFFs in Africa are not endemic to specific countries, but rather to certain high-value, low-weight commodities.

Of the estimated $40 billion of IFFs derived from extractive commodities in 2015, 77% were concentrated in the gold supply chain, followed by diamonds (12%) and platinum (6%).

The report aims to equip African governments with knowledge on how to identify and evaluate risks associated with IFFs, as well as solutions to curb IFFs and redirect the proceeds towards the achievement of national priorities and the SDGs.

It calls for global efforts to promote international cooperation to combat IFFs. It also advocates for strengthening good practices on the return of assets to foster sustainable development and the achievement of the 2030 Agenda for Sustainable Development.

Tax revenues syphoned off

Tax revenues lost to IFFs are especially costly for Africa, where public investments and spending on the SDGs are most lacking. In 2014, Africa lost an estimated $9.6 billion to tax havens, equivalent to 2.5% of total tax revenue.

Tax evasion is at the core of the world’s shadow financial system, according to UNCTAD. Commercial IFFs are often linked to tax avoidance or evasion strategies, designed to shift profits to lower-tax jurisdictions.

Due to the lack of domestic transfer pricing rules in most African countries, local judicial authorities lack the tools to challenge tax evasion by multinationals.

But IFFs are not just a national concern in Africa, said Nigeria’s President Muhammadu Buhari: “Illicit financial flows are multidimensional and transnational in character. Like the concept of migration, they have countries of origin and destination, and there are several transit locations. The whole process of mitigating illicit financial flows, therefore, cuts across several jurisdictions.”

Solutions in plain sight

Solutions to the problem must involve international tax cooperation and anti-corruption measures. The international community should devote more resources to tackle IFFs, including capacity-building for tax and customs authorities in developing countries.

African countries need to strengthen engagement in international taxation reform, make tax competition consistent with protocols of the AfCFTA, and aim for more taxation rights, said the UN trade agency.

Distributed by African Media Agency (AMA) on behalf of UN News.

You might also enjoy

Subscribe To Our Newsletter

Get updates and learn from the best

Conférence de Presse en Ligne


Les frontières terrestres ne doivent pas constituer des obstacles à la dissémination de votre message. Grâce à notre service de conférence de presse en ligne, nous vous offrons l’opportunité de vous rapprocher des médias africains, chaque fois que vous en aurez besoin.

Nos services comprennent:

Digital Communications


Today, social networks constitute an organization’s first point of contact with a user and a potential customer. At first glance, you need to convince of the relevance and quality of your content to stimulate and motivate the user to go further. We create consistently inspiring online strategy to meet business objectives, engage stakeholders and enhance our client brand’s reputation internally and externally.

 

Communication​ digitale


Les réseaux sociaux représentent aujourd’hui le premier point de contact d’une organisation avec un utilisateur et un client potentiel. Au premier coup d’œil, vous devez le convaincre de la pertinence et de la qualité de votre contenu pour l’inciter à aller plus loin. Nous créons pour vous une stratégie de communication précise et adaptée sur les réseaux sociaux pour atteindre les objectifs commerciaux, impliquer les parties prenantes et améliorer la réputation de votre marque en interne et en externe.

Promotion​ d’événements


Le succès d’un événement réside en moitié dans sa promotion. Peu importe la beauté de l’événement, la qualité des orateurs et de l’ordre du jour, si personne ne rapporte ou ne parle de votre événement, vos efforts seront vains. Nous vous aidons à façonner votre récit et à créer un engouement autour de votre événement. De l’annonce de l’événement à la tenue de celui-ci, nous accompagnons votre effort de planification et le reflétons sur toutes les plateformes médiatiques.​

Formation​ Médiatique


Nous fournissons à vos porte-paroles les outils nécessaires pour présenter vos principaux messages et répondre avec confiance et cohérence aux questions. Notre formation est organisée soit à distance ou en présentiel, avec des études de cas réels et des répétitions. Nos clients repartent avec le sentiment d’être à l’aise devant les journalistes et d’agir en tant qu’ambassadeurs de la marque.

Veille​ Médiatique


Nous mesurons votre portée en relations publiques et rendons compte des informations de votre industrie et des activités de vos  concurrents en surveillant la majorité des canaux de diffusion dans toute l’Afrique. Une veille médiatique complète et opportune est essentielle pour s’assurer que vous ne manquez aucune référence à votre marque, que vous êtes constamment informé de ce qui se passe dans votre industrie et que vous êtes prêt à saisir les opportunités et à réduire les risques en temps opportun.

Relations​ Média


Peu importe le lieu où ils se trouvent, nous sommes une source d‘informations fiables pour les journalistes qui écrivent sur l’Afrique. Nous nous connaissons mutuellement et ils nous font confiance, car nous leur fournissons un contenu crédible qui les aide dans leurs tâches. Nous nous entretenons quotidiennement avec des journalistes aux quatre coins du continent, ce qui fait de nous l’un des organismes les plus efficaces pour mener des campagnes de relations avec les médias.

Stratégie et développement de contenu


Nous créons des stratégies de communication intelligentes, bien documentées et spécialisées destinées à vous aider à construire un récit fort qui engagera votre audience. Nous travaillons en synergie avec vous afin de rédiger des communiqués de presse et des articles d’opinions qui alimentent le récit de votre entreprise. Notre équipe a une expérience approfondie dans la création de récits et le développement de contenu multimédia.

DIFFUSION DE COMMUNIQUES​ DE PRESSE​


C’est le service phare d’AMA. Nous avons mis en place des canaux de diffusion des communiqués de presse auprès des journalistes des 54 États africains ainsi qu’auprès des journalistes américains et européens couvrant les sujets relatifs aux marchés émergents.​

​Nos services comprennent:​

Event Promotion


Half of the success of an event lays in its promotion. Doesn’t matter how beautiful the event is, how wonderful the speakers and the agenda are, if no one reports or talks about your event, your efforts are gone. We help you shape the narrative and create a drumbeat around your event. From the announce all the way to the outcome of the event, we accompany your planning effort and echo it through all media platforms

Media Training


We provide your spokespeople with the tools to present your key messages and answer questions with confidence and coherence. Our training is organised either remotely or face-to- face, with real case studies and rehearsals. Our clients leave feeling comfortable being in front of reporters and acting as brand ambassadors.

Media Monitoring


We measure and report on
your PR reach, industry news, and competitive activity by monitoring most channels in North, West, Central, East and Southern Africa. Comprehensive and timely media monitoring is critical to ensuring that you don’t miss any reporting of your brand,
you’re constantly informed on what’s going on around your business, and you’re ready to capitalise on opportunities and mitigate
risks in a timely fashion..

Media Relations


We have become an authoritative source of news for reporters writing about Africa, wherever they are. We know them, they know us, and they trust us for providing them with timely and accurate content that helps them do their job. We speak to reporters on a daily basis in all corners of the continent and this makes us one of the most effective agencies in running media relations campaigns.

Strategy & Content Development


We create smart and localised communications strategies to help build a strong narrative that will engage your audiences. We partner with you to create press releases and thought leadership pieces that sustain a drumbeat for your company’s narrative. Our team have deep experience in shaping narratives and developing media content.

PRESS RELEASE WIRE DISTRIBUTION

This is AMA’s flagship service. We have set up channels of distribution towards the journalists of the 54 African states, as well as to American journalists and European journalists covering emerging markets issues.
Our service includes:

Editorial advice

Localised editorial piece when needed

Distribution to the major print, broadcast and online publications along with industry-specific publications

Follow-up calls to secure interview request

Guaranteed distribution to Africa.com

Distribution to Bloomberg, LexisNexis and Thomson Reuters

Social Media Reach: Facebook, Twitter, LinkedIn, Instagram

Full online monitoring and print monitoring when available. Includesreadership stats and Advertising Value Equivalent

Translation in French, Arabic and Portuguese available