The African Development Bank (AfDB) has again expressed its dismay at the volume of illegal financial flows out of the continent annually. Africa loses $50 billion through trade dereliction of duty, corruption of Africa’s leaders and the smuggling of Africa’s natural resources by western corporations.
While speaking at an event themed, “Strengthening the role of parliament in combating illicit financial flows from Africa (IFFs)’’ in Abuja, AfDB’s Senior Director in Nigeria Dr. Ebrima Fall said if the illicit financial flows are allowed to continue, they could lead to financial crises and widespread poverty on the continent, the latter already happening in some instances.
His solution for stopping these flows was for more transparency across every sector, and reducing the mercantile avenues for some of these financial flows to move out of Africa.
“The need for transparency is obvious because the main motive of most perpetrators of illicit financial flows is to hide wealth from tax authorities and law enforcement agencies, which is why, information on beneficial ownership is very important,” he said.
This is not the first time the AfDB has expressed its dismay at the sheer amount of money Africa loses every year. A report released by the Organisation of Economic Corporation and Development (OECD) with the assistance of the AfDB in February of this year revealed that illicit outflows in Africa are outpacing public development aid on the African continent. Development aids were worth $20 billion in 2016, less than half of what leaves the continent illegally every year.
While Foreign aid has steadily increased since the turn of the new millenium, the illicit plunder of Africa’s resources with the profits stored in tax havens of corporate western corporations, usually outside the continent, the transfer of its wealth by corrupt African officials into Swiss banks seem to also be keeping pace with it.
This suggests that perhaps Africa doesn’t need foreign aid if it manages to get its house in order and stop illicit financial flows. Analysts say if these illicit financial flows are curtailed, African governments will meet their developmental targets faster, and most importantly achieve the UN Sustainable Development Goals by 2030.
These conversations are very more important considering the fact that citizens of western nations are beginning to believe their taxes are going into developmental programs in developing countries. Also, some of the leaders of these nations are basing their foreign policies on this belief. There is the mistaken belief that western nations giving foreign aids to developing countries is redundant, since infrastructure continues to crumble in theirs.
There are those who believe foreign aid contributes to their countries’ national debt, when the opposite is closer to the truth. Banks in nations like Dubai, the US, UK and Switzerland are some of the destinations for many of Africa’s wealth stolen from countries rich in natural resources, like Nigeria with its oil, while western nations are encouraged to contribute only 0.7 percent of their GNIs to development aid.
Moreover, the revelations of the #PanamaPapers and #ParadisePapers, extraordinary works of investigation carried out by journalists around the world, is damning for some western companies mining some of Africa’s resources, and the African leaders that let them do it. It is not a co-incidence that many African countries with more mineral wealth have some of the worst indices on poverty.
While transparency and closing channels of IFFs are good solutions to stopping IFFs, they are part of and not the whole solution. Reforming post colonial institutions that still make it possible for Africa’s wealth to leave the continent’s shores, nearly unchallenged, should be the end goal of any solution.