Africa is losing a staggering $90 billion every year to illicit financial flows, according to a top official of the African Development Bank (AfDB). This amount is more than the continent receives in development aid and foreign direct investment combined.
Kevin Chika Urama, Chief Economist and Vice President of Economic Governance and Knowledge at the AfDB, made this alarming revelation on Thursday in Abuja, Nigeria, during the graduation ceremony of the first cohort of the Public Finance Management Academy for Africa (PFMA).
The PFMA is a comprehensive initiative launched by the AfDB in June 2022 to provide structured capacity development in public financial management (PFM) to African countries. The academy aims to address the challenges in the PFM cycle, such as domestic revenue mobilization, macro-fiscal modeling, sustainable debt management, and curbing illicit financial flows.
Urama said that illicit financial flows are a major obstacle to Africa’s development, as they deprive the continent of much-needed resources for infrastructure, health, education, and social services. He called for collective action to rectify the situation, stressing the urgency of tackling the issues within the PFM ecosystems.
He also highlighted the strategic importance of PFM in enhancing economic governance and knowledge management to promote wealth creation and prudent management of public finances.
The first cohort of the PFMA, consisting of 145 public officials from 45 African countries, commenced the program in July 2022. Of these, 52 officials from 26 countries completed the program, earning certification as PFM experts in their respective nations.
Urama acknowledged the collaboration of institutional partners, including the International Monetary Fund, World Bank, and other key organizations, for their commitment to the success of the program.
He further urged the graduates to be torchbearers in promoting transparency and accountability in their respective countries. He also encouraged them to champion Africa’s efforts to efficiently manage resources and enhance productivity.
The PFMA is one of the many initiatives that the AfDB and its partners are undertaking to address the challenge of illicit financial flows in Africa. According to a UN report released in September 2020, Africa loses nearly $89 billion a year in illicit financial flows such as tax evasion and theft, amounting to more than it receives in development aid.
The report also estimated that curbing these flows could generate enough capital to finance the continent’s infrastructure gap, as well as provide much-needed funds for health and education.
The report recommended several measures to combat illicit financial flows, such as strengthening regional cooperation, enhancing tax governance, improving data collection and analysis, and increasing global support and solidarity.
The AfDB has also been at the forefront of advocating for increased efforts to curb illicit financial flows in Africa, especially in the wake of the COVID-19 pandemic, which has exacerbated the continent’s economic and social vulnerabilities.
The bank has supported various initiatives, such as the African Tax Administration Forum, the African Union’s High-Level Panel on Illicit Financial Flows, and the Global Forum on Transparency and Exchange of Information for Tax Purposes, to enhance the capacity of African countries to mobilize domestic resources and prevent illicit outflows.
The bank has also provided technical and financial assistance to African countries to improve their PFM systems, strengthen their anti-corruption frameworks, and foster regional integration and trade facilitation.
The bank’s vision is to help Africa achieve its full potential and become a prosperous, integrated, and resilient continent. By addressing the challenge of illicit financial flows, the bank hopes to contribute to the realization of this vision and the attainment of the UN Sustainable Development Goals and the AU Agenda 2063.
Source: Business Day
