CISLAC, WATAF, call for policy action to stop illicit financial flows

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The Civil Society Legislative Advocacy Centre, CISLAC, in collaboration with the West Africa Tax Administration Forum (WATAF) has called for urgent policy action to stop illicit financial flows in Africa.

The Executive Director, CISLAC, and Transparency International, TI, Auwal Rafsanjani made the call at the “One Day Dialogue on the Status of Adoption of HLP report on IFFs in ECOWAS member states”.

The High Level Panel (HLP) on IFFs from Africa was established in 2012 by AU/ECA conference of African Ministers of Finance, Planning and Economic Development.

The panel’s mandate was to determine the nature and patterns of illicit finance outflows from Africa, establish the level of illicit financial outflows from the continent , and Assess the complex and long term implications of IFFs for development, among others.

 

Rafsanjani who appreciated the West Africa Tax Administration Forum (WATAF) for the opportunity for the formidable collaboration, maintained that illicit financial flows is still a challenge in Africa.

 

He therefore called for urgent measures to curb the increase of illicit financial outflows particularly in Nigeria and Africa at large.

He said,”As you may know, the calls for prudent use of our Resources have led us to a conviction that the illicit financial outflows from the continent has been and still is an obstacle to development for the citizens of Africa.

“As we delved deeper into the bottlenecks of development financing, it became obvious that the drive to stem illicit financial flows was just the beginning of a multi-faceted campaign to stop the bleeding of Africa’s resources.

 

“We hope to broaden the conversation on illicit financial flows (IFFs) beyond specialist circles in order to generate support for public policy measures.

“Progress was made on this front when the Report of the High-Level Panel (HLP) on Illicit Financial Flows from Africa was presented at the 24th AU Summit in Addis Ababa which held between the 21st to 23rd of January 2015 and was adopted by African leaders.

“The report echoed 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 haemorrhage.”

Rafsanjani disclosed that according to the HLP report, illicit outflows increased at an alarming rate of 20.2% per year from 2002 to 2011(Global Financial Integrity calculations).

According to him, the panel noted that the dependence of African economies on natural resources extraction makes them particularly vulnerable to IFFs, but also that the digital economy and new technologies are making it easier, adding a troubling new dimension to the problem.

“The report singles out the issue of weak national and regional capacities as a major obstacle in efforts to curb IFFs, making it clear it is ultimately a political issue.

“The last few years has seen a notable emergence of civil society groups across the continent who have joined together to rally against IFFs. Indeed, IFFs have become a key part of Agenda 2063 conversations on Africa’s development as well as in 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. Past responses have borrowed, sometimes uncritically, the concepts and proposed solutions from initiatives advanced by the G20 and the OECD – responses based largely on the problem as experienced by global North economies.

“The challenge will be to instead root the work in the specificities of the African context and experience.

“Therefore, a crucial task for African CSOs and partners is to properly problematise IFFs and develop distinctly African policy responses.

“It is in view of all the above, as well as the emergence of the COVID-19 pandemic which has exacerbated the fiscal deficit situation in most African countries-Nigeria inclusive, equally bringing to the fore, the urgency to address the vice of the illicit outflows, as well as the instrumentality of a modernized and effective tax system and a tax administration, which effectively engages in regional cooperation efforts, as essential fiscal policy tools for raising revenues for sustainable development.

“By this, the Civil Society Legislative Advocacy Centre/Transparency International-Nigeria in collaboration with the West African Tax Administration forum (WATAF) and with support from Oxfam in Nigeria, envisioned this engagement.

“Thus, it is our hope that this engagement will provide the platform for robust deliberations and an opportunity to harvest an agenda towards strengthening sub-regional coordination in the effective and sustainable implementation of recommendations of the HLP report within member states in the sub-region.

“Let us be reminded that the development of Africa can only be championed by an AFRICAN INITIATIVE, it is not good enough that not much has been done out of the recommendations of this panel seven (7) after,” he said.

 

Speaking on the scourge of IFFs on African economy, the Special Adviser to the President on Economic Matters in the Office of the Vice President, Amb. Adeyemi Dipeolu revealed that Africa was estimated to be losing more than $50bn annually in 2011.

Dipeolu pointed out that 40% Africans live on less than $1.90/Day and that accounts for 70% the global poor

He revealed that enablers of IFFTs include poor governance, weak regulatory structures, double taxation agreements, tax incentives and financial secrecy jurisdiction, among others.

Amb. Dipeolu disclosed that HLP made recommendations which include that African countries should ensure that they have clear
and concise laws against mis-stating the price, quantity, quality, or other aspect of trade in goods and services in order to move capital
to another jurisdiction or avoid taxation.

Other were that African countries should establish or strengthen transfer pricing units of their countries of operation, establish arrangements for exchange of tax information between them as well as with global partners, regional integration arrangements should be used to introduce accepted standards for tax incentives and should establish or strengthen the independent institutions and agencies responsible for preventing IFFs.

On the criminal components of IFFs, he said the HLP recommended that training and empowerment of investigators responsible for identifying the criminals engaged in illicit activities by African governments is critical, among others.

He equally revealed that there were also recommendations on the corrupt component of IFFs, additional strategic measures by African states , and further responsibility by African partners.

Amb. Dipeolu recalled that HLP was presented at 24th AU Summit of Heads of States and Government in January, 2015 (Addis Ababa), which immediately prompted the passage of a Special AU declaration on IFFs.

According to him, mandates from the Special declaration call for increase of advocacy by the Chair, AU and ECA.

Others include further research bro be carried out on the topic, development of African countries to combat IFFs, and work to be done on turning the HLP recommendation into actionable results.

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