Former South African president Thabo Mbeki is expected in Zambia on 17th June, 2013 to chair a two-day high level meeting on illicit financial flows.
The high level panel on illicit financial flows in Africa, which was established by the United Nations Economic Commission for Africa (UNECA) and the African Union (AU), was inaugurated in February 2012 to address the debilitating problem of illicit financial outflows from Africa which is estimated at US$50 billion a year.
This is contained in a press statement released to ZANIS in Lusaka today by UNECA Communications Officer Sampa Kangwa-Wilkie.
Ms. Kangwa-Wilkie said illicit financial flows constitute among others things undocumented commercial transactions and criminal activities characterized by over pricing, tax evasion and false declarations
facilitated by some 60 international tax havens and secrecy jurisdictions that enable creating and operating millions of disguised corporations, shell companies, anonymous trust accounts and fake
Ms. Kangwa-Wilkie further said other techniques used include money laundering, transfer pricing and corruption.
“Illicit financial flows are a global problem. Their impact on the continent is monumental thereby representing a significant threat to Africa’s governance and economic development and governance. Current evidence shows that Africa lost over US$ 854 billion in illicit financial flows between 1970 and 2008 corresponding to a yearly average of about US$22 billion,” she said.
The trend has been increasing over time and especially in the last decade, with an annual average illicit financial flow of US$ 50 billion between 2000 and 2008 against a yearly average of only US$ 9
billion for the period 1970-1999.
Ms. Kangwa-Wilkie however said these estimates may well be short of reality as they exclude such other forms of illicit financial flows as proceeds from smuggling and mispricing of services.
She added that some of the effects of illicit financial outflows are the draining of foreign exchange reserves, reduced tax collection, cancelling out of investment inflows and a worsening of poverty.
She said preliminary evidence shows that taking prompt action to curtail illicit financial outflows from Africa will provide a major source of funds for development programmes in the continent in the
Ms. Kangwa-Wilkie said one of the keys to achieving success is the adoption of laws, regulations and policies that encourage transparent financial transactions.
The panel chaired by Mr. Mbeki will be composed of nine other members from Africa and outside the continent.
Over 60 delegates from East and Southern Africa are expected to attend the high level panel meeting in the Zambian capital, Lusaka as part of several regional consultations with key stakeholders on the project Africa including the executive, legislature, judiciary and key civil society and private sector representatives.
Other consultations have already taken place in North Africa and Kenya, Tunisia, Liberia and Nigeria.
Meanwhile the former President Mbeki will hold private talks with President Michael Sata to enhance dialogue and policy discourse on the matter.