Stop the Bleeding – Curbing Illicit Financial Flows

Stop the Bleeding – Curbing Illicit Financial Flows



this is not about campaign against multinationals this plan we would like clean businesses who come here pay their taxes when they're worthless the idea of reporting all their profit in a small headquarters where there are only two or three people working there and overlooking the entire operation which is 60 70 percent of it is happening in this continent that cartel abusive transfer pricing for example trade miss invoicing for example there's a lot of work that remains to be done we must end indeed achieve the objective of stopping the bleeding of retaining these resources on the continent which are realistically flowing out of the continent these things are not so dissimilar to one that happens every day across the African continent a businessman goes into a bank and makes a transfer of funds to an offshore company little questions are asked a millions are funneled out to the country electronically in a matter of to a territory where little or no tax is accrued this scenario is also surprisingly legal a senior government Minister collaborates with a mineral company executive to stash money and profits earned illegally in a foreign bank go woman gives $5,000 to a man who hopes to get a whole family across the border illegally this is a human trafficker he deposits the money in an overseas bank where it is clean and legitimized all these are examples of illicit financial flows or iff money leaving the continent being followed into international global already developed capitals and depriving African national economies of vital liquidity and resources the campaign to stem ifs or previously term capital flight is by no means a new phenomenon and has recently received a boost by the revelation of the Panama papers an unprecedented leak of over 11 million files detailing wealthy individuals and numerous multinationals exploiting secretive offshore tax regimes has elevated the issues of illicit flows to the forefront of the global agenda and media scrutiny the establishment of the high-level panel represented a watershed and new strategy to combat the illicit flows all started in on a Sunday in Malawi we were preparing for the opening of the African Minister of Finance planning an informal development conference we were really surprised with the response those who attended I said no this has to go to the ministerial proper the funding had to our discussant and african ministers of finance in their wisdom they said no this is a development issue that is too important for the continent we cannot allow this continent the poor part of the world to subsidize the respond I sometimes Alfred rhesus has been like a high etre with many heads and a strange Hydra when you cut some heads by the time you get to the seventh head the first one has regrown it's so dynamic it keeps on changing shape and form so we have to be resolved to the fact that we will always be chasing finding out new ways of a visit financed after and trying to deal with them that is the first thing GFI analyzes illicit financial flows not only out of Africa but out of other parts of the world as well we did a study of illicit money going out of Africa we were asked by you and ECA to come and discuss it we did so this is going back five or six years now human ECA was frankly fascinated with our analysis that the commercial component of illicit financial flows is bigger than the corrupt component of analyse information flows because quite honestly the media had been for years enjoying its criticism of Africa for the amount of corrupt money that is going out so we came along and and said yes corruption is a problem but the biggest part of this is commercial according to GFI these are the three clear definitions of iff as seen before earlier corruption criminal and the commercial aspect the estimated fifty to eighty billion US dollars that the African continent loses annually in illicit flows is about double that what the continent receives in Oda or official development assistance moreover based on the methodology of the Economic Commission for Africa abusive transfer pricing and mis invoicing the underreporting of amounts produced and profits made are another major source of commercial illicit funds lost forever when we then presented our report to the African heads of state and government they adopted the report in full adopted the recommendations that we had made and and then decided there's African heads of state and government to follow up on the implementation of what had been the recommendations which had then been adopted as decisions of of the AU summit there has been a confluence of forces that have really given this a boost and also as you know very worldly the birth of this was looking for how the continent can finance itself and one of the immediate low-hanging fruits was the issue of these differential flows out so I think it's firstly there for leadership secondly circumstance and thirdly this money to brought to this by the easier so it's been a an inciting walk and the whole purpose is to promote African development and how to promote it the hostile resources is resource mobilization and in that regard what are the obstacle to results mobilization and one of the obstacles is illicit financial flows for the continent there is really nowhere else on the continent where there is a plug in for policy and legislative shifts that we need to make on the continent to defend our outflow other than currently the high-level panel and they're doing a tremendous job because they've gone from beyond the report and letting it gather dust in somebody's office but also looking at the systemic work that needs to be done work with regards to policy and policy shifts both at the ministerial Ministry of Finance level as well as bringing in civil society and regional organizations to make the necessary policy shops that we require it's good work even before the Panama papers they have managed to elevate the issue of international financial flows at least for illicit financial flows from from Africa at least into an international issue as a global challenge also the in some day anticipated the Panama papers fail to be similar in future but already the work of the panel has already put this into the fore has already elevated this into a global issue a trouble channel something to power in global action illicit flows have steadily increased over the years in scale and magnitude and fundamentally undermine our ability on the continent to achieve our sustainable development goals impede transparency and its further increasing inequality and poverty the campaign to stem IFFT is now galvanized under a wider context incorporating an array of actors from civil society tax and governance advocates and government and parliamentarians we wanted it on the Global Agenda it is now on the Global Agenda so that many people are part of this campaign to stop the continent bleeding of these resources so it's government's it's the more society its business is everybody however all we see as bringing the interests of citizens on the table to ensure that the design of policies that will ultimately curtail illicit financial flows and ensure domestic recirculation our policies that are not also at the same time leading to increased inequality and having a situation where is already the the poor that that are already preparing the burden that are gonna suffer that under for that to happen we need to have a civil society organizations in the room to create that critical mass actors again demand that the partitions that the government's actually fulfill their commitments honor their commitments in terms of what they said they are planning to do especially do you even know that this is and if you do what does that mean to you as a political pad in election campaigns parties that are in Parliament because we don't we just say MPM come from ruling party some from opposition those are in ruling parties how are you influencing your own ruling party into in terms of iff but more so because parliamentarians get a budget for constituencies are you taking this as an issue at constituency level where you are saying in terms of mobilization how do I take this message and explain it to an ordinary African I mean Panama papers came for Africa will say they came there on for most African communities it just it has meant nothing people don't even know what that is so we are saying it even if it is your role as an MP to take this message to that lower level because these are the people that vote and keep government's afloat if they are not empowered to know what is going on they are never going to hold government accountable accountability is also in need of another key building block to fight illicit flows capacity capacity building of appropriate institutions across the continent is key to improving skills and enforcing financial retention we begin to see that capacity challenges or the lack of capacity is a critical issue for combating illicit financial flows and stop the stopping the bleeding in particular one area where African countries have big problem is actually implementing the legislations and the laws that they have for a you know for money laundering and for corruption and for all kinds of activities illegal outflow of funds and so we are working very hard to strengthen these institutions so that they can become more effective in you know dealing with these issues and they become better coordinated in terms of what they do a clear metric on the success of tracking illicit flows is also its subsequent retrieval headway has now been made in a number of countries generating repatriation of funds and the curtailment of aggressive tax avoidance regimes but we need even improvements to try get better you know better accounting and International Accounting Standards better capacity with customs officials better capacity in drawing agreements and I another thing just identifying or trading it will take some effort Uganda recently won an international court case against a British oil company and as a result of that case gathered four hundred and twenty three million u.s. dollars in income that they would have lost did they not have a capital gains tax policy and law in Uganda many African countries do not have that and because Uganda had that law they were able to go to international arbitration win the case and now have that income the cumulative effect of strengthening financial architecture challenging banking secrecy and reforming common tax orthodoxy reduces outflows and critically increases income on the continent as the fight to stem illicit flows continues the policy and legislative shifts being implemented by the panel will inevitably need to adapt to future innovative more clandestine methods of our floors pre-empting a drive to shift not only the legal structures but also an overall moral offensive on iff and their consequences you know for effect that basically everybody in the world is going to disapprove it might be legal but if it's immoral and they people understand what that immorality means in practical terms but secondly I think the as much great commitment among governments throughout the world that the where legislation doesn't exist it must be passed where it exists it must be enforced that you need all of these agreements and benchmark standards and all that to ensure that you can even have both both a you can have moral motivation please act correctly but must also have the law on your side to say those who don't act correctly then leave the law can act against them so that you see even the definition of what's illicit in terms of the law as people understand the loopholes and so on and and the impacts the negative impact of this illicit flows in terms of the quality of the lives of many many people you

2 thoughts on “Stop the Bleeding – Curbing Illicit Financial Flows

  1. Do not pamper a thief with warning not to steal you no more?
    Who are the rich nations and how did they get their wealth in the first place? Is it not by robbing Africa thru many forms of exploitations – elephant pouching for ivory, forceful human traffic for enslavement, colonizing for more enslavement, uneven trade practices of fixing mineral and produce prices while increasing prices for manufactured good from Europe, loan sharking thru IMF/WB groups.?
    And all these practices is what has become the global norm the white man and his Arab brothers knew and operated by thru blood covenant to stifle the resource rich Africa's growth by any means necessarily, and here our leaders at AU want to talk to hyena to take it easy on the goats without strong consequences?

    Train more young Africans in telecommunication technologies and pull money together and lift satellites over all over Africa and take over the MTNs and the Vodafones across Africa if these leeches think they could come over Africa and build massive returns on the investments of their shareholders without reinvesting in the telecom sector that had plateaued with many mediocre services.
    The Vodafon in Ghana that bought the state Ghana Telecom had since ceased to expand on land lines knowing fully well that no serious thriving business community can be taken seriously without an expanded land line telecommunications to support with all its benefits that are vital to business to breath freely.

    How could these "investors" think we can operate all vital businesses – hospitals,schools, labs,banks,district level local governments ect,ect on scratch card generated mobile phones, huh, huh ?
    But we've allowed to dominate the narrative and for them to convince us that that is a "leap frog" as regurgitated by our own not-so-cleaver foreign minister Hannah Tetteh.
    Leap-frog from where to where?
    We need to master the analog perfectly hands down in order to evolve with innovations in the digital 'cos if the digital fails us, the only thing that will save the day will be our mastering of the analog.
    WE NEED THE LAND LINES TO TRULY RISE AS AFRICA. And that means Vodafon and MTN need to reinvest or else we will take over these companies and nationalize them. YES, NATIONALIZE them and no amount of threat and sanctions and REGIME CHANGE will do us nothing.

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