How illicit financial flows impede Africa’s development- Expert

African countries are committed to mobilizing adequate and predictable resources to finance the sustainable development goals agenda but they continue to be impeded by a number of factors, chief among them the loss of more than $50 billion annually through illicit financial flows, says Economic Commission for Africa’s (ECA) Sylvain Boko.
Speaking at the on-going three-day High-Level Policy Dialogue on Development Planning in Africa, which is underway in Cairo, Egypt, Mr. Boko, Principal Regional Advisor and Head of Development Planning and Statistics at the ECA, said it was unacceptable that Africa’s development agenda continued to hampered by such illegal actions.
“It is estimated that $100 billion a year, about four percent of Africa’s GDP, have been illegally earned, transferred, or used, much of it due to mis-invoicing. This retards Africa’s growth; weakens public institutions and rule of law; discourages the culture of paying taxes and value-addition to natural resources; and results in countries over relying on official development assistance,” said Mr. Boko.
He said addressing IFFs on the continent requires hard data on the scope of IFFs, removing legal loopholes that facilitate IFFs, designing cohesive international agreements to address IFFs; and developing local and national capacity to address IFFs, among others.
Mr. Boko said challenges to SDG financing on the continent include own-source revenue generation, access to ODAs & foreign direct investments, and new or innovative long-term financing; and international capital markets; global economic downturns, natural disasters, geopolitical tensions or conflicts; institutional and administrative capacities and insufficient or inefficient intra-continental and international trade.
The ECA Principal Regional Advisor said while national development planning processes embodied resource mobilization, many countries were yet to effectively link the two.
Overall, he said, the scale and diversity of SGDs financing available was growing across the region.
“This offers significant potential to drive regional progress toward realizing the SDGs,” said Mr. Boko, adding domestic resource mobilization improved substantially in recent decades in Africa, but tax-to-GDP ratios were still below the 25 percent threshold deemed sufficient.
“The challenges are many and varied, but not insurmountable. In this regard, countries must build technical, legal and administrative capacity for effective public financial management,” he said.
He added that accurate and robust data was necessary for robust SDGs financing frameworks and monitoring resource flows, including IFFs.
The High-Level Policy Dialogue on Development in Africa is being held under the theme; Financing the Sustainable Development Goals in Africa: Strategies for Planning and Resource Mobilization. The meeting is being attended by high level participants from member States, including Ministers of Planning and Finance, Director Generals of Planning Commissions and others.