Illicit financial flows thwart human rights and development in Africa


PHOTO/Oxfam


by IMANI COUNTESS

The Universal Declaration of Human Rights turned 70 on 12 December and governments and civil society organisations around the world were commemorating the day with a range of activities.  However, the threat of illicit financial flows to the respect of human seems to have been forgotten on that day. 

The United Nations launched a global campaign earlier this year to engage audiences to promote understanding and to reflect upon the ways that everyone can stand up for human rights.  The Declaration has been a global beacon for Africans fighting against colonialism and for inclusive economic equality and sustainable development.  

They stand as aspirational goals for nations, and standards that nations are duty-bound to uphold and promote.  But, what if despite your country’s commitment to uphold these and other fundamental freedoms, every year it was robbed of the financial resources necessary to promote and protect rights?  

This is the case for most nations in Africa where Illicit financial flows (IFFs) rob countries of US $60-100 billion [some reports say more than double this figure] each year; losses that in many countries exceed foreign direct investments and development assistance.  Funds that could be used to secure basic economic and social rights, for example the rights to social security, decent work and human dignity, are instead held in secret tax havens for the benefit of corporate elites. 

In 2015 the African Union’s Economic Commission on Africa released Illicit Financial Flow:  Report of the High-Level Panel on Illicit Financial Flows from Africa.  The report, generally known as the Mbeki Report, after the panel’s chair, former South African President Thabo Mbeki, defines IFFs as “money illegally earned, transferred or used,” a definition that includes money laundering, tax abuse, market and regulatory abuse, along with practices that ‘go against established rules and norms, including legal obligations to pay tax.”  

Some 30 percent of IFFs are attributed to criminal activities, and five percent to corruption.  The panel determined that 65 percent is attributed to commercial, or business activity.  The most prevalent method of commercial theft is the practice of trade misinvoicing, where companies report export values to the developing countries that are far below their actual worth, which results in a reduction in corporate income taxes, customs duties, and value added taxes.  

Nigeria, Africa’s most populous nation and its largest economy, lost US $2.2 billion in 2014, which according to Global Financial Integrity (GFI), a Washington, DC-based think tank, was equal to four percent of total government revenue, resources that could have been used for investment in education, health or to address the persistent problem of government wage theft. 

Nearly 30 out of Nigeria’s 36 states are unable to pay their workers on time.  According to Working for Peace in North-East Nigeria, a September 2018 report by the Solidarity Center, a US-based international labour organisation, medical professionals caring for internally displaced victims of Boko Haram are paid their government wages irregularly, despite the fact that they, along with teachers and civil servants, are targeted and killed by the extremist group. 

Ghana loses nearly US $1.4 billion a year to IFFs. As monies owed to Ghana left the country, it borrowed US $930 million from the International Monetary Fund (IMF).

Pambazuka for more

Comments are closed.