Africa to curb illicit financial flows

Keikantse Lesemela
Tuesday, 13 June 2017
Africa to curb illicit financial flows

While some African countries are seen to be developing faster, jobs and inequality have become critical challenges for Africa. According to World Bank, growth in Sub-Saharan Africa slowed markedly in 2016 to 1.5 percent and it is projected to recover in 2017 to 2.6 percent and will continue to strengthen in 2018. 

 

However, African policy experts have projected that economic growth in Africa will likely continue to occur alongside limited decent job opportunities and stark inequalities in income, wealth and access to social services. Speaking during African Policy Circle Workshop last week, Botswana Association of Local Authorities (BALA) President, Mpho Moruakgomo said in many countries, the current growth pattern has actually increased the dependence on the export of primary commodities and minerals and often led to premature deindustrialisation and stagnation of agricultural productivity. 

 

“The growth therefore has often translated in increased import of food and manufactured products and the virtual export of African jobs and human capabilities. Now in Botswana we import about 90 percent of our food,” said Moruakgomo.

 

He explained that trends of decreasing African ownership of its assets as well as shrinking retention of the benefits of its growth are of great concern and are the core issues of the global inequality problem. Moruakgomo said that it is critical that African economies transform in a way that puts inclusive growth at the centre to address enduring inequalities. 

 

“Importantly, a move to diversify economies, and add-value in specific sectors, should not rely on an assumed positive relationship with equality. An Africa with a larger share of global GDP, diverse imports and a larger tax-base is not necessarily a more equal continent in which prosperity is shared,” he said.

 

It is important, he said, to craft a vision of structural transformation that has inclusive growth as its most central rationale. In her presentation, Agency for Cooperation and Research in Development (ACORD) Head of Advocacy and Policy Development, Salina Sanou said African countries need to expand their domestic resource mobilisation capacities and enhance prospects for alternative development financing in order to implement the Millennium Development Goals (MDGs).

 

She explained that in an attempt to attract foreign direct investment, many African countries have sometimes encouraged unhealthy tax competition whilst granting undue tax incentives such as the tax holidays allowed to multinational companies. 

 

“These practices result in loss of government revenues and are unlikely to provide a stable base for the accumulation of public finance on the scale needed to realise the Special Development Goals across all of Africa’s fifty-five countries,” she said.Sanou also explained that African countries need to create an international tax body at the United Nations level that will police and punish countries and individuals that practice illicit financial flows.

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