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Special Report: Anti-graft agencies and CSOs’ moves against Illicit Financial Flows worsening poverty across Africa

*Tax Justice Network Africa and Civil Society Legislative Advocacy Centre lament that Illicit Financial Flows have threatened economic stability and development across the African continent, making several countries, including Nigeria, to bear the hardships of corrupt practices as their citizens also get much poorer by the day

Gbenga  Kayode |  ConsumerConnect

In a renewed move to combat Illicit financial flows in Nigeria, two Civil Society Organisations (CSOs), including Tax Justice Network Africa (TJNA) and Civil Society Legislative Advocacy Centre (CISLAC), Wednesday, October 4, 2023, floated a platform to address the national malaise in the payments ecosystem.

The platform known as the African Parliamentary Network on Illicit Financial Flows (IFF) and Taxation (APNIFFT), is aimed at combating illicit financial flows in the West African country, agency report said.

Cross-Sections of Guests at the Forum       Photo: NAN

In his address at the ceremony, Mr. Auwal Rafsanjani, Executive Director of CISLAC, said that the platform being coordinated by TJNA would provide a platform for African members of parliaments to join efforts, and chart a pan-African roadmap to tackle the challenges of IFFs and tax injustices.

Rafsanjani explained: “This is because IFFs and tax injustices have continued to drain the much-needed domestic resources to propel Africa’s development objectives as outlined in the African Union Agenda 2063.

The Executive Director of CISLAC also said that the inauguration of the Nigerian caucus would provide a coordinated structure that would enable members to collectively drive legislative interventions to curb IFFs and promote Domestic Resource Mobilisation (DRM).

IFFs threaten Africa’s economic development and stability -Rafsanjani

The Executive Director of CISLAC further noted: “IFFs threatens economic stability and development and Africa has been on the receiving end of the effects for a long time, like many countries of the continent, Nigeria with its large market and population is faced with its large share of this act of corruption.

Two of Nigeria’s anti-corruption regulatory agencies

“It is estimated that about 90 billion dollars is lost annually to illicit financial flows in Africa, enabled by trade mis-invoicing, tax evasion among others, and Nigeria alone reportedly accounts for 20 percent of this figure.”

He contended that with already dwindling resources for Africa to sufficiently fund its development needs and the struggle to mobilise domestic resources, IFFs had led to even more excessive losses from the continent.

Rafsanjani lamented this negative development was making African countries poorer and poorer and undermining economic growth and development efforts in African countries by reducing the funds available for public services, infrastructure, and poverty reduction.

He stressed: “In all honesty, the global north can do better if it truly desires to empower Africa and self-fund its development.

“Rather than promote Africa’s dependence on foreign aid, the West can start to truly help by halting, punishing, and repatriating illicit outflows from Africa.”

The International Monetary Fund (IMF) has described IFFs as “the movement of money across borders that is illegal in its source (e.g. corruption, smuggling), its transfer (e.g. tax evasion), or its use (e.g. terrorist financing).”

IFFs drain Nigeria’s resources, tax revenues resulting in dwindling economy: ICPC

ConsumerConnect reports the Independent Corrupt Practices and Other Related Offences Commission (ICPC), besides the efforts of the Economic and Financial Crimes Commission (EFCC), said that IFFs had affected Nigeria in various ways – through loss of revenue, underdevelopment, poor infrastructure and healthcare, among others.

The drain on resources and tax revenues caused by IFFs blocks the expansion of basic social services and infrastructure programmes that are targeted at improving the wellbeing and capacities of all citizens, particularly the very poor.

In Nigeria and other developing countries, IFFs mean fewer hospitals, schools, Police, roads, and job opportunities.

ICPC’s quest to offer solutions

In its quest to find a lasting solution to this unpleasant phenomenon, the ICPC is beaming its search light on areas that are prone to IFFs, such as tax avoidance, tax evasion, base erosion and profit shifting.

The anti-graft regulatory Commission also noted that it initiated a System Study and Review of the IFFs in the Oil and Gas, and as well as Tax sectors. It has also constituted an IFFs/Tax Fraud Group to address the menace.

ICPC has hosted four international conferences to sensitise Nigerians, Africans and the world on the ills of IFFs and how to collectively work together to stop/combat the menace.

However, experts have opined that countermeasures, including institution building strategies, international cooperation and information exchange, and fiscal transparency could minimise the evil of IFFs and their far-reaching effects on the economy.

Development practitioners need to understand the nature of the problem of illicit financial flows as an obstacle to development, and be aware of interventions that can reduce such flows, they said.

Why Africa must fight against IFFs vigorously

Rafsanjani, CISLAC Chief further said: “But Africa cannot afford to fold its hands and wait for the West to fight her battle.

“Africa must take the battle against IFFs very seriously.

“It is in this light that initiatives like APNIFFT and other efforts on the continent to combat IFFs must be appreciated and supported to succeed.”

In her contribution at the forum, Ms. Ndidi Ashu, Lead Monitoring Evaluation and Knowledge Management at TJNA, said the network was committed to promoting accountability and progressive taxation in Africa.

Ashu said the network worked in alignment with the African Union Agenda 2063 through key thematic areas comprising tax and international financial architecture, tax and investments tax and natural resources governance and tax and equity.

The Lead Monitoring Evaluation and Knowledge Management at TJNA stated: “We collaborate with leading researchers, policymakers, campaigners and CSOs to drive comprehensive change in tax policies, challenge detrimental investment practices, enhance international tax transparency, and restore African countries …. over natural resources.”

APNIFFT, she noted, has been inaugurated in 43 countries so far and would continue to partner with members of parliaments across the continent to address IFFs and domestic resource mobilisation challenges.

In a similar vein, Ms. Josephine Drabo, West Africa Regional Coordinator at APNIFFT, said IFFs was detrimental to African countries’ continent and damaging.

Drabo said the concept of APNIFFT identified the importance of continental collaboration and networking, as well as the strategic roles of parliamentarians in championing the campaign against IFFs.

She also explained the negative implications of IFFs on consumers, saying

“Illicit financial flows is like a snake in the ocean and we need several hands on-board to be able to catch it.”

Dr. Khanyisele Tshabalala, Chairperson of APNIFFT, said the amount of money lost in IFFs, if curtailed, would aid in building a developed African continent and countries.

How IFFs worsen consumers’ poverty level across the continent – APNIFFT

The aim of the network is to have APNIFFT in all the African countries to build a sustainable economy for the continent, said Tshabalala.

The Chairperson of APNIFFT stated: The fight against IFFs has to translate into the daily lives of every citizen on the continent.

“People are protesting against it, amazing the kind of messages they send, ‘we can’t buy bread’, ‘we can’t buy milk’, ‘the economy is hard’, ‘we lost our houses’, times are hard for Africans.

“That is why this is crucial and it is time to rise and address it.”

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