Africa Has To Block Illicit Financial Flows To Usher In Real Development

Africa’s developmental efforts in the past has cost it much more than it could bear, forcing the continent to look overseas for assistance. While this has served sufficient over the years, stakeholders at the recently concluded African Development Forum (ADF) have agreed that aid is no longer the panacea to the development of Africa; if Africa must develop, it has to help itself. But first, the continent has to curb illicit financial flows.

“The continent must embark on reforms to capture currently unexplored or poorly managed resources. This includes curtailing illicit financial flows and rather transforming those funds into a powerful tool for enhancing domestic resource mobilization, as a way of furthering the continent’s development,” said Carlos Lopes, Executive Secretary, of the Economic Commission for Africa, organiser of the ADF.

While the economic growth being witnessed by Africa has been impressive over the years, it is imperative that growth translates to development. For that to happen, Africa must embark on reforms to capture currently unexplored or poorly managed resources. These include curtailing illicit financial flows and transforming funds into a powerful tool for enhancing domestic resource mobilization, as a way of furthering the continent’s development.

Estimates from various recent studies including “Financing Africa’s post-2015 development agenda” reveal that, from 1970 to 2008, Africa lost $854 billion to $1.8 trillion in illicit financial flows.

The Economic Commission for Africa noted that loss of funds through illicit financial flows undermines revenue generation and reduces the benefits from economic activities, particularly in the extractive sector. It also undermines Africa’s ability to mobilize resources generated by such sectors to fund developmental goals.

The annual average loss to the continent over the past decade is estimated at $50 billion. This stifles domestic savings and investment, drains hard currency reserves, reduces tax collection and consequently undermines Africa’s structural transformation efforts.

To tackle the issue of illicit financial flows and the dynamics that drive them, transparency in revenue declaration and payments from multinational corporations would have to be improved, tax haven regulations and secrecy jurisdictions tightened and efforts to curb money laundering strengthened, as a way of retrieving diverted money and spending it on poverty reduction and economic growth activities.

Source: http://www.ventures-africa.com/2014/10/africa-has-to-block-illicit-financial-flows-to-usher-in-real-development/