By Kingsley Ighobor
Africa Renewal – On matters pertaining to Africa’s socioeconomic and political development, former South African president Thabo Mbeki’s voice, tempered by age and experience, continues to be heard.
Seven years since leaving office, Mr. Mbeki does not hide his impatience with Africa’s failure to fulfill its great potential. At the moment Mr. Mbeki is leading a war against illicit financial flows (IFFs) from Africa, as the head of the African Union’s 10-member High-Level Panel on IFFs.
Africa is losing at least US$50 billion annually to illegal transactions. Some reports suggest the continent may have lost up to US$1 trillion in the past 50 years. Global Financial Integrity, a Washington, DC based nonprofit research and advisory organization heavily involved in the IFF fight, lists the main channels for IFFs as: nefarious commercial activities of multinational companies, drug trafficking and smuggling, and bribery and embezzlement. Some companies also engage in over-invoicing or underpricing trade deals, transfer pricing (avoiding taxes by setting prices in trading between their divisions), offshore banking and the use of tax havens.
In view of the scale of IFFs from Africa, isn’t Mr. Mbeki swimming against the current?
“Illicit financial flows are a challenge to us as Africans, but clearly the solution is global. We couldn’t resolve this thing by just acting on our own as Africans,” Mr. Mbeki began, in an interview with Africa Renewal in New York.
The former president has laid bare his sharp criticisms in a provocative foreword written for a report published in 2015 by his panel. “Africa is a net creditor to the rest of the world,” he maintains, implying that illicit financial outflows from the continent far outstrip official development aid.
In February, Mr. Mbeki led his panel to the United States to promote its report and consequently raise global awareness about IFFs from Africa. A recurring theme in his speeches at the various forums in New York and Washington, D.C. was the urgent need to tackle these IFFs. As billions are earned and extracted from the continent, more than 400 million Africans live on less than US$1.25 a day (the threshold for absolute poverty), and the gross domestic product per person on the continent is just US$2,000, which is a fifth of the global average, according to Mr. Mbeki’s panel’s report, titled Track It! Stop It! Get It!
Is the West ready to cooperate with Africa to fight IFFs? “Yes,” Mr. Mbeki responded, because “[cooperation] is of material relevance to the West; not so much that they have suddenly fallen in love with the Africans or the developing world, but because there is a shared interest between the developed and developing countries to deal with this matter.” His panel has twice met with officials of the US government (in 2014 and in 2016), including Vice President Joe Biden. “The US government gave us their own reports regarding what they are doing about tax issues, corruption, and domestic legislation. So we agreed to work together in a structured way to pursue these issues and work is going on.”
In its advocacy for a global alliance to combat IFFs, the success of Mr. Mbeki’s panel will depend on how effectively it can communicate that a victory concerning IFFs is potentially a win-win for everybody. The former president is upbeat about progress made in
enlisting the support of international institutions such as the United Nations, the World Bank, the International Monetary Fund, the Organisation for Economic Co-operation and Development (OECD) and so on.
In addition, “The G7 and the G20 have been discussing how to deal with the illicit financial flows because it is a matter of concern to everybody,” Mr. Mbeki said.
“The UN Secretary-General Ban Ki-moon indicated the commitment of the whole UN system, not just ECOSOC, to make sure that at various levels they have a practical focus on this matter,” Mr. Mbeki confirmed.
The panel is soliciting global support, but Africans are also picking up the gauntlet, he said. “We have interacted with African civil society and there is a great enthusiasm to act on IFFs.” He referred to the “Stop the Bleeding” campaign to end IFFs, led by Trust Africa Foundation, as an example of civil society’s commitment to the cause. “It’s not that the African continent is saying to the rest of the world, ‘You do this about illicit financial flows.’ What we are saying is, ‘We as a whole have to act on this.’”
By Kingsley Ighobor