The African Development Bank and the Coalition for Dialogue on Africa (Coda) have launched a three-year support project to improve a regional coherent and coordinated response to illicit financial flows.

In a statement, AfDB said the African Financial Integrity and Accountability Project will help African stakeholders actively engage in stemming such flows to improve domestic revenue mobilisation in African countries.

Tchereni: It is perpetuating poverty

Reads the statement in part: “The project aims to improve regional coordination of combating illicit financial flows and the oversight and accountability of public finances, for optimal revenue mobilisation and management in African countries.

“The support will foster a coherent African response to illicit flows, in line with the African Union Assembly Special Declaration on IFFs passed in January, 2015, and will advance Africa’s continent-wide asset recovery agenda encapsulated in the Common African Position on Asset Recovery adopted in February 2020.”

United Nations Conference of Trade and Development (Unactd) data shows that Malawi loses five percent of its total wealth as measured by gross domestic product (GDP) annually due to illicit financial flows.

This, based on the findings, means that for every K100 generated in the country, K5 is lost to movements of money and assets across borders, which are illegal in source, transfer or use, leaving the country with K95 of its hard-earned money.

The Unctad report titled ‘Tackling Illicit Financial Flows for Sustainable Development in Africa’ said stopping illicit financial flows could almost cut in half the annual financing gap of $200 billion that African countries, including Malawi, faces to achieve the Sustainable Development Goals.

The report said in Africa, an estimated $88.6 billion, equivalent to 3.7 percent of its GDP, leaves the continent as illicit capital flight every year.

Malawi University of Business and Applied Science economics proffessor Betchani Tchereni explained that such behaviour is robbing the country of its resources, leading to suppressed taxes, wages and denying workers a fair share of their labour.

“Illict financial flows [IFFs] is basically theft by capital owners from workers that in turn is perpetuating poverty and poor quality of life through distorted low wages,” he said.

Tchereni said the country needs specific regulations that can be enforced through punitive active actions.

The country’s revenue loss through illicit financial flows if contained could also bail out the country in terms of revenue given that it is currently faced with fiscal pressures due to its constrained resource envelope.

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