Whilst GDP growth has indeed been above an average of 5% for most of Africa, we rarely get insights into how African economies are structured and also a discussion on who benefits from this growth. One salient fact about the growth is that it comes largely from the global commodity super cycle and to some extent the boom in the telecommunications industry. Enterprises that produce and trade in the commodities are mostly large multinationals domiciled outside of Africa. They enjoy tax holidays, revenue repatriation arrangements and relaxed labour laws. Revenue repatriation agreements allow companies to remit their revenues to the head office, but this practice is NOT part of IFF. Beyond the benefits cited above, these large companies are the drivers of illicit financial flows. According to the AU/ECA report, the most common practices include trade mispricing, under-invoicing of exports, exaggeration of import values, and general tax avoidance schemes. IFF processes are very complex in nature and some of the reports in this handbook attempt to expand upon them - except to restate that they are costing Africa about US$50 billion per year - approximately 68% of Kenya’s GDP. Human development, inclusive of access to quality health provision, education, jobs and decent standards of living remains unattainable for many Africans. The benefits of the current growth cycle have been highly unequal and limited mostly to higher income earners. More and more Africans perish in the Mediterranean every year trying to enter Europe in search of greener pastures. We also know about US$50 billion is needed annually to fund infrastructural projects amid the steady decline in Official Development Assistance (ODA). The AU’s Agenda 2063 underlines improved domestic resource mobilisation as a key pillar for Africa’s sustainable and inclusive development. It is in this light that we at TrustAfrica, alongside our friends and partners within civil society, are calling for a new development compact underpinned by transparency, accountability and equity. We aim at collecting a million signatures against an opaque global economic system that accommodates IFFs. It is morally reprehensible for economic actors to continue engaging in these harmful practices at the expense of Africa’s future. We need sufficient public energy and an outcry for an immediate end to these practices. Our governments and regional processes should play their part in fast tracking mechanisms and laws for compliance with the new thinking. -
Tendai Murisa, Executive Director, TrustAfrica
Get Involved!! Learn why we are doing this..
TrustAfrica is supporting African civil society organisations in launching a popular campaign to end illicit financial from Africa. Dubbed “Stop the Bleeding – Campaign to End Illicit Financial Flows from Africa”, this is envisaged as a campaign rooted in African experiences, driven by African agency and reinforced by global Africa solidarity linkages. The campaign broadens the conversation on illicit financial flows beyond specialist circles and seeks to mobilise ordinary people and key constituencies such as students and youth, trade unions and grassroots social movements to be a key part of the voices for change. The much awaited Report of the High Level Panel (HLP) on Illicit Financial Flows from Africa was finally presented at the 24th AU Summit in Addis Ababa and adopted by African leaders. The findings from the former South African president Thabo Mbeki led HLP echoes civil society voices from across the continent in highlighting illicit financial flows as a serious threat to inclusive development in Africa and calling for urgent practical policy action to stop the hemorrhage. One of the most notable findings of the HLP process is that illicit outflows from Africa are large and increasing at an alarming rate of 20.2% per year (according to Global Financial Integrity (GFI) calculations for the period 2002 – 2011). While observing that the dependence of African economies on natural resources extraction makes them particularly vulnerable to IFFs, the panel also point to emerging new and innovative ways of generating IFFs enabled by the digital economy and new technologies. In addition, the report singles out the issue of weak national and regional capacities as a major obstacle in efforts to curb illicit outflows, while making it clear that ending illicit financial flows is ultimately a political issue. In the last few years there has been a notable emergence of concerted advocacy efforts from various civil society based groups across the continent rallying against the issue of illicit movement of finances from Africa. Indeed, today the subject of illicit financial flows is a key part of conversations on Africa’s development road map as reflected in Agenda 2063 and ongoing processes such as the Financing for Development and the post 2015 Sustainable Development Goals. The HLP report presents an opportunity for African CSOs and partners to forge a coherent continental architecture for tackling IFFs which presently does not exist. A particular challenge is that some of the responses from the continent have borrowed, sometimes uncritically, concepts and proposed solutions from mostly global north driven processes such as the G20 and Organisation for Economic Cooperation and Development (OECD) initiatives without factoring in the specificities of the African context and experience. Thus, while embracing what works from the proposals put on the table so far by groups such as the OECD, it is imperative to realize that these responses are largely based on a particular experience of the problem by Western and Global North economies. The proposed solutions therefore will not adequately respond to the specific ways that the challenge of illicit flows and its attendant root causes manifests in the African context. Therefore, a crucial task for African CSOs and partners is to properly problematise illicit financial flows in the African context and develop distinctly African policy responses.
- Briggs Bomba, TrustAfrica
Download the eBook here.