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East African Community loses more than $30b to illicit financial flows

RemittancesThis week the Economic Commission for Africa (ECA) is meeting with its partners in the Kenyan capital, Nairobi to carve out specific action plans to stop the bleeding of African economies of billions of dollars through illicit financial flows.

As the meeting goes on, it is important to consider the fact that in 10 years from 2004 to 2013, the East African Community put together has lost over $30 billion to illicit financial flows, ghanabusinessnews.com computation of data provided by the Global Finance Integrity, a non-profit, Washington, DC-based research and advisory organization, which produces analyses of illicit financial flows, advises developing country governments on effective policy solutions, and promotes pragmatic transparency measures in the international financial system as a means to global development and security shows.

The region has a population of 150 million and a GDP of $146 billion.

The African continent as a whole is on record to be losing some $50 to $60 billion every year to illicit financial flows.

Uganda’s loss is at $7.1 billion in that period and Sudan, before the secession of South Sudan has lost over $13 billion. South Sudan is now a member of the Eastern African Community.

Kenya lost $829 million, while Burundi lost $826 million. Rwanda’s loss is calculated to $3.5 billion and Tanzania lost $4.8 billion.EAC_IFFsDuring the validation workshop, the ECA intends to among other things, establish a clear work plan and deliverable actions for the core group and Consortium of Stakeholders working to confront the illicit financial flow (IFF) challenge on the continent.

The workshop, would also seek to review and endorse the draft terms of reference of the Consortium which will oversee the implementation of the anti-IFF Project Document and ultimately stem the growth of IFFs from Africa.

The Panama Papers has shown the extent of complicated relationships that exist between politicians and shady business interests in the quest to hide their wealth and to bleed African countries. While the exposé in the Panama Papers has shocked the world, and showed how much Africa is losing through questionable deals, not much has been seen from African governments themselves to act to stop the flow of illicit finance.

So far, only South Africa has announced that it will set up a beneficial ownership register, while Ghana has amended its Companies Law to include a clause on opening a beneficial ownership register – when that will happen is not known yet.

By Emmanuel K. Dogbevi
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