Illicit financial flows haunt African economies
African Forum and Network on Debt and Development (Afrodad) has said African governments need political will and enabling policies to help reduce illicit financial flows (IFF).
Speaking in Blantyre on Tuesday during a media training, Afrodad executive director Fanwell Kenala Bokosi said IFF is draining Africa’s resources, including tax revenues and hinder the level of savings required to address key development issues.
He said Africa is endowed with various mineral resources but lags behind in harnessing the financial resources for her development.
Bokosi said Malawi lost about K204.3 billion ($278 million) due to forex externalisation, one of the forms of IFF.
He highlighted the need for African countries, including Malawi, to address IFF if it is to significantly improve its domestic resource mobilisation efforts.
Bokosi, an economist by profession, said despite having natural resources that can help drive its economy, Malawi has not significantly benefited from such resources due to poor policies, lack of capacity and negotiating skills by government when entering into contracts mining firms.
“Malawi needs to build its capacity if it is to start benefiting from the extraction industry. We have a 1981 Minerals Act which was formulated whilst we believed we had no minerals in the country.
“In the Act, everything belongs to the people of Malawi but we voluntarily gave custodial powers of these minerals to the President. The fines in the act are not even in tandem with the current economy. People are moving huge sums of money outside the country and are being left scot free. I know we are working on changing these laws and those are some of the issues that we need to look into,” he said.
Bokosi outlined some of the signs of IFF which include criminal activities arising from business related activities, criminal activities—which essentially keep the transactions out of view of law enforcement agencies or revenue authorities—and corruption.
He challenged the media to question, dig deep and expose all the finer details surrounding financial transactions in both the public and private sectors.
According to the United Nations Sustainable Development Goals (SDGs), African countries are expected to reduce IFF by 50 percent by 2030.
In his presentation titled, ‘The role of the Media in Extractive Industry Management, Nation Publications Limited (NPL) rewrites editor MacDonald Bamusi noted that there are knowledge gaps on operations of the extractive industry due to lack of transparency by players in the industry, government working in isolation and the media looking at investors with suspicion.
“Journalists need to report aggressively, analysing our extractive industry and how it relates to IFF. Investigative reporting should not only target politicians. We need to provide a platform for meaningful debate on extractive industry issues, talk about mining issues, engage the people at grassroots and share their stories,” he said. n
