The amount of money that is being moved out of African countries illegally and through tax avoidance is now estimated to be $100 billion annually. Initial estimates put illicit financial flows out of Africa at $60 billion every year.
Dr. Abdalla Hamdok, the Deputy Executive Secretary of the UN Economic Commission for Africa (ECA) told African Ministers of Finance and Economic Planning meeting in Addis Ababa, Ethiopia that money illegally transferred across borders in addition to aggressive tax avoidance now amounted to a loss of $100 billion annually for African states.
“I think the debate is not about the seriousness of the issue. The challenge is how we can arrest it. This is an African problem. The only way we can resolve together is by working together with our partners,” he said.
The Research Director at the Africa Tax Administration Forum, Dr. Nara Monkam, showed the destination of funds and profile of those engaged in the transferring of the money: “Some multi-national corporations employ tax evasion, trade mis-invoicing and abusive transfer pricing.”
She noted that inter-country cooperation at a continental level was required to tackle such practices.
Additionally, Dr. Monkam said, given that illicit financial flows from Africa involve actors from across the globe, and that the laws and policies of non-African jurisdictions have a serious impact on illicit flows from Africa, it has become a priority to review the adequacy of global frameworks in tackling illicit financial flows.
She further indicated that there was also a need for greater funding for technical assistance on tax matters and improvements in tax administrations.
By Emmanuel K. Dogbevi