AS a continent we need this matter addressed, not just understood” emphasised Thabo Mbeki. He was referring to illicit financial flows (IFF), said to have cost Africa an astounding $1 trillion over the last 50 years and about $50 billion every year.
Talking at a side event of the UN financing for development conference in Ethiopia, Mbeki was just one member of a panel who all reaffirmed their committed to not having another “talk shop” because the issue at hand is costing Africa huge amounts of money that could be better used for development.
The issue at the forefront of the discussion was how to actually implement the comprehensive AU/ECA High Level Panel Report on IFF, launched in January 2015.
Action under duress
Carlos Lopes, the executive director of the United Nations Economic Commission for Africa, warned that, to deal with the issue of IFF in Africa, “we need cooperation from many instances – national and international – and that this will not happen easily, it will happen under duress.” A sentiment echoed by Mbeki who pointedly told the African Union Commission representative on the panel, Erastus Mwencha, that “many [African] governments will only work on this issue when there is pressure from the AUC.”
Lopes also stressed that this would not be a simple matter either, that it will involve “big judicial, legal processes”, that if we’re talking about issues of tax evasion as IFF that “major legal battles will need to be fought in order to engage with the problem.”
At the national level Lopes emphasised that it is key to ensure “more efficiency in customs, ensure regulatory systems will catch the more visible IFF and public expenditure systems that use technology so that there is less room for corruption.”
At the global level Lopes was less convinced, stating that to date the only change seen was in relation to an issue that was attractive to Organisation for Economic Co-operation and Development (OECD) countries themselves, namely “transfer pricing”.
Nevertheless, there were representatives from Norway and Sweden who both offered insight into how individual international actors can have an impact.
Charlotte Petri Gornitzka, the Director General of the Swedish International Development Cooperation Agency (SIDA), explains how Sweden has been committed to helping with “technical assistance and capacity building within the field of taxes for many years.” She described how there were encouraging results from Swedish tax experts who had worked with the South African government in knowledge sharing and that this model was now being replicated in other African countries including Kenya and Liberia.
In the case of Norway, Bjorn Brede Hansen, the Deputy Director General in Norway’s Ministry of Foreign Affairs, said that although he did not want a big talk shop, that there needed to be an international forum that would bring together all the “good forces” on the issue and “come out with concrete actions”.
Something additional that Norway had done independently, which would stem IFF further, was that parliament passed two decisions recently; first, voting to establish a public registry of corporate ownership information, tackling the abuse of anonymous companies through increased transparency. Secondly, a decision to have tougher and more stringent country-by-country reporting which would include all jurisdictions.
Record and report keeping is a key issue, one that was mentioned by Steve Kayizzi, Chief Economist of the African Development Bank. Kayizzi stated that whilst the bank still had not dealt with the issue of IFF, that it hosts the African Legal Support Facility – a facility that has been supporting African governments in the negotiation of complex commercial transactions since 2010. Whilst its primary function was not to deal with IFF, it could take on this role and assist with investigations into records – a lengthy process, highlighting the importance of keeping accurate and important reports on file.
Whilst national and international governments and agencies are crucial to combatting IFFs the final group mentioned by most panelists were the civil society groups.
Yao Graham of the Third World Network emphasised that CSOs are fundamental actors in that they improve awareness of the issue and have a key role in finding and researching for solutions.
CSOs, such as TrustAfrica and the Tax Justice Network, were key groups responsible for keeping the dialogue going once the high panel report came out and were the driving force behind the “Stop the Bleeding Campaign” – contributing to keeping the pressure up on governments and in building a constituency in the fight against IFFs, specific to Africa.