Africa losing $1.4 trillion since 2009 in illicit finance drain – UN
Illicit financial flows have been draining nearly $1.4 trillion from the African economies since 2009, said a UN official on Wednesday.
Washington-based think-tank Global Financial Integrity (GFI) defines illicit financial flows (IFFs) as money that is illegally earned, transferred, or utilised. IFFs reduce domestic resources and tax revenue needed to fund poverty-reducing programmes and infrastructure in the continent.
According to the United Nations Economic Commission’s High Level Panel, Africa as a whole is estimated to be losing more than $50 billion in illicit financial flows every year.
Tax evasions cost Africa around $73 million during the period from 2005 and 2015, said Vera Songwe, UN Economic Commission for Africa, at the 41st meeting of the Association of African Central Banks (AACB) in Sharm El-Sheikh, Egypt.
Mostly, IFFs are being perpetuated by the multinational companies in Africa, which through illegal and immoral actions, deny the continent its due share of revenue.
It is normally done through tax evasion, money laundering, and false declaration.
Other illegal methods used include overpricing, transfer pricing, tax evasion, money laundering, corruption and false declarations, hampering economic growth and resulting in billions and in some cases trillions in lost tax revenue.
IFFs’ key drivers are poor governance, corruption, and weak regulatory structures, which require strengthening of technical and human capacity, proper understanding of issues related to IFFs and dealing with financial crimes.