NAN-HE-20
Funds
By Temitope Ponle and Lucy Nwachukwu
Abuja, July 27, 2017 (NAN) Special Adviser to the President on Economic Matters, Mr Adeyemi Dipeolu, said that Africa’s GDP would grow by 15 per cent if Illicit Financial Flows (IFFs) was stamped out.
Dipeolu, made this known during a presentation titled “Stopping Illicit Financial Flows to Boost Growth in Africa” described IFFs as “monies illegally earned, transferred or used”.
He delivered the speech at High-Level Technical Consultation on Public Tax and Fiscal Transparency Rules for Multinationals and Private Individuals in Africa in Abuja.
Dipeolu said that IFFs from Africa are a large and growing problem that are outstripping foreign direct investment and official development aid to the continent.
The adviser called on international stakeholders to enhance efforts in talking IFFs to boost economic growth in the country and Africa.
He said that it was pertinent for stakeholders in Africa to stop illicit flow of funds to boost revenue generation, discourage corruption and enhance development.
“It is important to stem IFFs because they have revenue effects; every dollar gained by Foreign Direct Investment and Official Development Assistance in Africa is offset by a two dollars loss through IFFs and debt repayments.
“IFFs encourage corruption and weaken state capacity and reduce resources that could be used in African countries for boosting aggregate demand, providing public and social services, strategic investments and infrastructure.”
He said that the illicit flow of funds also posed a major challenge in achieving the Sustainable Development Goals (SDGs) in Africa.
“These are flows that are in violation of laws in origin, during their movement or in their use; the intention behind IFFs is to hide wealth, evade or avoid taxes, dodge payment of customs duties or royalties and domestic levies.
“African economies grew by 1.7 per cent in 2016 after growing at an average of nearly six per cent per annum in first decade of new millennium.
“Africa aspires in the context of the SDGs to end poverty by 2030; this poses a huge challenge as the continent accounts for 50 per cent of the global poor as opposed to 1990 when it only accounted for 15 per cent.
“Population growth in Africa is 2.6 per cent which is twice the world average and translates to lower growth of per capita income.
“ The continent accordingly needs all the resources it can have to underpin its development efforts; illicit financial flows are a drain on these limited resources.”
Dipeolu further said that IFFs were difficult to estimate because they were hidden and difficult to track.
NAN reports that in an African Economic Outlook report, the African Development Bank said Africa lost an annual average of 60.3 billion dollars or around four per cent of GDP in illicit outflows between 2003 and 2012.
The report jointly published by the Organisation for Economic Co-operation and Development (OECD) and the UNDP, said during the same period, Official Development Aid (ODA) and Foreign Direct Investment (FDI) averaged 42.1-billion dollars and 43.8-billion dollars respectively.
The report said these unlawful money flows involve practises such as tax evasion , through trade misinvoicing and abusive transfer pricing, money laundering, bribery by international companies and abuse of office by public officials.
According to the report, IFFs for sub-Saharan Africa, in 2012, were estimated to be 68.6 billion dollars, just slightly less that ODA and FDI combined coming in at 41.1 billion dollars and 35.4 billion dollars.
Research estimates suggest that Africa’s capital stock would have increased by more than 60 per cent if these illicit funds had remained on the continent, while GDP per capita would be 15 per cent higher.
Referencing research done by a high level panel of the African Union and UN Economic Commission for Africa examining illicit financial flows, the report noted that large commercial corporations account for the vast majority, or 65 per cent, of illicit money flows, following by organised crime 30 per cent and corrupt practices, five per cent, among others. (NAN)
LCN/TOP/SH
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edited by Sadiya Hamza