Mediaboss Marketing

On 18 February 2012, the United Nations Economic Commission for Africa (UNECA) established a High Level Panel to examine what it referred to as 'the debilitating problem of illicit financial outflows from Africa'.

In a statement issued a day ahead of the launch of the panel, UNECA asserted that:

Former South African President Thabo Mbeki chairs the panel. The concern with a net leakage of resources from Africa is as old as the anti-colonial politics of liberation. It has, however been given new impetus, generally as part of anti-corruption initiatives but specifically in the wake of declining levels of aid from developed countries.

There is a growing perception that the gap between the available finance and what is required can perhaps be filled by the closure of the most significant avenues of resources drainage. The extent of such drainage remains a matter of speculation, with the figures pertinent to Africa ranging between $50 billion and $80 billion per year. Various sources have attempted to quantify the scale of the problem, including Transparency International (2004), financial research group Global Financial Integrity (2005), Christian Aid (2007) and the Tax Justice Network (2007).

The absence of unanimity on this score is probably attributable to the fact that the terrain concerned is quite broad, and each organisation can only be exposed to part of it at any given point in time. It is less important to achieve consensus on scale than it is to achieve it on the measures to be taken to stem illicit financial outflows from Africa.

Several months ago, I lamented the absence of concerted efforts by the relevant authorities against abusive transfer pricing transactions, despite their suspected prevalence in African countries. The UNECA initiative offers some hope of a consensual and systematic approach to such transactions.

The UNECA Panel has undertaken to study the nature, pattern, scope and channels of illicit financial outflows from Africa. It will use the data gathered to sensitize governments, citizens, policy makers, and political leaders in Africa. It pledged to mobilise the support of development partners for effective measures to curb such outflows to be adopted. It is ultimately its goal to influence policies at national, regional and international levels to 'neutralize' illicit financial outflows from Africa.

It goes without saying that tackling this age-old problem will not be a walk in the park. The Panel will probably be aware of some of the thorniest challenges that have impeded previous initiatives. It is somewhat odd that the unavailability of good quality, comprehensive and up to date information is among the most critical. Researchers who have done substantial work in this area, such as Raymond Baker, have found this an insurmountable challenge.

Part of the blame for this may be laid on the absence of consensus among countries that are linked together through trade of what information is tax-relevant to them. An agreement on this should be followed by the extraction, from the sectors concerned, of as much of that information as is available, so that it can be shared.

As Mr Mbeki observed, sometimes there are glaring disparities between exporting and importing countries on the quantity or quality of commodities exchanged between them. Since intra-African trade is relatively low compared to that between African and non-African countries, much of the tax-relevant information will be located beyond the continent. How much of it is accessible to African countries?

See the rest here:
Africa: Illicit Outflows From Africa Exceed 'Normal' Corruption