The African Development Bank (AfDB) has said curbing illicit financial flows in Africa requires sound public financial management, international coordination and adherence to international standards.

The Director General of the Nigerian Country Office for the African Development Bank, Mr. Lamin Barrow, stated this while making his welcome remarks during the last module of Public Finance Management Academy for Africa (PFMA) Public Finance Management Executive Training Series, with the theme, “Enhancing Accountability, Transparency and Curbing Corruption and Illicit Financial Flows in Africa” in Abuja, Nigeria.

The Public Finance Management Academy for Africa (PFMA), which is one of the several other programmes organised by AfDB to help build the capacity of officials of Regional Member Countries, has been running for the past 18 months with the trainees meeting on a quarterly,is in its final training with graduation ceremony for the first cohort slated for 15th December, 2023 in Abuja.

While citing a report by the United Nations Conference on Trade and Development (UNCTAD), he regretted that about $.6.7 billion gotten from aggregate government revenues is lost to tax avoidance.

Barrow said, “Curbing IFFs will require enhanced international coordination and effective enforcement of international standards, such as the Financial Action Task Force (FATF)’s Standards on Anti-Money Laundering and Countering the Financing of Terrorism, Inclusive Framework on Base Erosion and Profit Shifting (BEPS), the Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI), Extractive Industry Transparency Initiatives (EITI) standards, Publish What You Pay, etc.

“The challenge of combating corruption and financial crimes in Africa is huge. In its Economic Development in Africa Report 2020 on the theme “Tackling Illicit Financial Flow for Sustainable Development in Africa”, the United Nations Conference on Trade and Development (UNCTAD) noted that one-sixth of the continent’s aggregate government revenues derive from corporate tax and ten percent of that revenue (US$6.7 billion) is lost to tax avoidance.

“The report estimated capital flight from Africa at US$88.6 billion annually for the period 2013 – 2015 which represent 3.7% of Africa’s GDP), which represents whereas total ODA and FDI for the same period stood at US$48 billion and US$59 billion, respectively.

“The Report further suggests that between 2000 and 2015, the total illicit capital flight from Africa amounted to $836 billion, which is more than Africa’s total external debt estimated at $770 billion, in 2018,” he posited

Speaking on the large illicit financial flows, he said this unfortunate lose often results to borrowing, making the continent a net creditor to the world.

“Lack of accountability and transparency, corruption and illicit financial flows create a vicious cycle of fiscal sinking hole in Africa’s public resources.

“As governments lose revenues through IFFs and corruption, they are forced to resort to more borrowing, which funds which may also be stolen due to weak PFM systems. Corruption and IFFs, therefore, fuel the debt vulnerabilities witnessed in many African countries.

“Africa is therefore a “net creditor to the world”. IFFs represents a major drain on capital and revenues on the continent, undermining productive capacity and prospects for achieving the Sustainable Development Goals (SDGs) and the African Union’s Agenda 2063 Goals, “he stated.

The Director General further stated that institutions must be properly financed and empowered to adequately perform their responsibilities which will directly lead to drastic reduction in illicit financial flows.

“Governments in Africa must ensure that revenue mobilization, accountability, transparency, anti-corruption and anti-IFFs institutions are adequately resourced to perform their functions effectively. To this end, the capacity and independence of the Supreme Audit Institutions and parliamentary oversight committees should be strengthened, while the voice and watchdog role of the media and civil society is protected.”

Meanwhile, Barrow reiterate the African Development Bank’s strong commitment to the partnership to improve PFM on the continent and boost domestic resources mobilization and the efficiency of public investment to achieve inclusive growth and poverty reduction in Africa