The Paradox Of Africa’s Illicit Financial Outflows | Independent Newspapers Limited
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The Paradox Of Africa’s Illicit Financial Outflows

Posted: Apr 8, 2016 at 3:00 am   /   by   /   comments (1)

Samuel Orovwuje

At the 24th African Union Summit held in January 2015 in Addis Ababa, Ethiopia, the Assembly of Governments accepted the High Level Panel Report on Illicit Financial Flows (IFF) from Africa. The report estimates that over 50 billion United State dollars wander annually and not accounted for across Africa. Indeed this estimate doubles the financial inflow into the continent from donor agencies and development partners. Regardless of the exact figure, it is incredibly clear that Africa will continue to substantially lose money for its development program.  The illicit financial outflow is one of the development traps that have kept Africa confined to a vicious cycle of underdevelopment, conflict, and indescribable human suffering.

Gloomily, the Mbeki report on illicit financial outflows highlights some of the negative impact it has had on foreign exchange reserves and reduced tax collections system, and it exposes the African leadership issue in driving development, and the horrid pain it imposes on the continent over the years.  Nonetheless, the report has continued to generate some enthusiasm and uncertainties among African leaders and their collaborators, particularly from the standpoint of active involvement in the illicit financial outflows from the continent through massive corruption of money laundering, purchase of sub standard equipment, contract over – invoicing and all sort of offshore illicit dealings with multinational companies and international trade partners that undermines best practices and regulatory framework that the Global North uses in protecting their financial transactions.

Interestingly, the Chairman of the Panel, Thabo Mbeki, and Former President of the Republic of South Africa made an official visit to the United States of America between February 16-19, 2016 on global advocacy mission to drum support from the international financial and political community to address the disheartening impact of illicit financial outflow on Africa’s development which has move backward and indeed stalling. In my view, the African Union (AU) must progress this report beyond advocacy to a more concrete institutional and intergovernmental framework with a view to addressing the way we do business in Africa particularly direct and indirect channels of fund transfers.

There is an evolving debate from the renewed advocacy about the benefits and drawbacks for Africa’s development. Most analysts point to the fact that the picture is very scandalous. The key question is how can African governments under the umbrella of the African Union make good its public speaking to reversing the trend and addressing the challenges which illicit outflows brings to bear on poverty reduction and development at large. This has implications for domestic policies in Africa, for negotiations between Africa and multinational corporations particularly the extractive industries, who need to attune their policies towards development and find a new role to grow stronger economic proceeds in Africa without sabotaging regulatory regime on financial accountability and strong ethical business practice.

Also, given the condition of ineptitude in political and leadership structures across Africa, the state is confronted with widespread corruption wherein the demarcation between public and private funds is difficult to distinguish. Furthermore, the issues of dysfunctional judicial system across Africa are bump to the realisation of financial transparency. Regretably also is that most African leaders are known to have pervasive and illegitimate network that assist siphoning public funds away from Africa often taken advantage of the weak national and continental institutional framework for financial responsibility and reporting.

I hasten to add that clanism and primordial bond to each state is stronger than the continental aspirations of the founding fathers of the African Union (AU). Hence; most African leaders do not have a common voice signing from the same development hymn. Therefore, the African Union must look beyond the rhetoric’s of advocacy and shuttle diplomacy across the globe and should develop a pragmatic reform agenda that could transform financial graciousness to reverse the trend of illicit outflows that are unfavourable to Africa’s progress and developmental needs.

It is my considered opinion that one of the stumbling blocks to the realisation of financial and economic prosperity is Leadership. The leaders lack moral suasion and political will in stopping illicit outflows as they pursue self perpetuation in office at the detriment of the common good. Therefore, Tambo Mbeki’s advocacy and diplomatic shuttles to the west and the United Nations agencies will not yield the desire results, as charity begins at home. The African Union must as matter of urgency of now looks inward to cure the cancer of illicit transactions that is killing human development in Africa.

In my view and perhaps more crucially, is that the African Union leadership must provide an uncommon solidarity and cooperation by thinking outside the traditional political box and should avoid the neo- colonial arrangement that has divided the continent along English, French, and Portuguese lines. Again, it is worth mentioning that the success for the control of illicit financial outflows lies with a committed leadership which the African Union lacks at this point in time.

Lastly, the double standard that governs the African Union in its 53 years of existence is a strong marker of its incapability to deliver common good to Africans. The African Union continues to showcase gross ineptitude in decisions that would leapfrog development. It appears that the Mbeki’s report will be another litmus test in keeping with the continental aspiration and the ideology of its founding fathers.

Orovwuje writes from Lagos

Comments (1)

  • Apr 13, 2016 at 5:34 pm EmmanuelUgah

    Africans and its leaders are making Africa poor by their acts.

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