Global Financial Integrity (GFI) welcomes the statements made yesterday by former South African President Thabo Mbeki on illicit financial flows at the third Financing for Development Conference. At an event in Addis Ababa, Ethiopia, Mbeki noted that in order to address the issue of illicit flows "there needs to be a concerted and sustained campaign around the world." "The principle challenge we face" he said, "is one of implementation." He expressed optimism about the impact the Financing for Development conference will have on illicit flows noting that there is "a common commitment" to address the problem "at a global level and at a national level."
Former South African President Thabo Mbeki has chaired the African Union (AU) and United Nations Economic Commission for Africa’s (UNECA) High Level Panel (HLP) on Illicit Financial Flows from Africa. The HLP’s final report, which was released at the 24th AU Summit in Addis earlier this year, recommends putting efforts to curtail trade-related illicit flows — constituting the vast majority of measurable illicit financial flows (IFFs) — foremost in African and global efforts to curb the ongoing illegal outflow of African wealth.
The Panel’s primary recommendation recognized the dominant role of trade misinvoicing in driving Africa’s illicit flows: “Given that most measurable IFFs are trade based, actions set forth in the recommendations below for improving capacity and accountability to curtail trade-related IFFs should be given primacy.” Many of Africa’s top thinkers and policymakers on illicit flows joined Mbeki on the panel; the Government of Norway and GFI President Raymond Baker are also members.
The High Level Panel, which began its work in June 2013, came about in part from research on the region’s illicit financial flows, including a GFI-African Development Bank (AfDB) report, Illicit Financial Flows and the Problem of Net Resource Transfers from Africa: 1980-2009. This report, released during the 48th AfDB Annual Meetings in Marrakech, Morocco, found that unrecorded illicit financial outflows were far larger than recorded inflows, making Africa a net-creditor to the rest of the world, not a drain.
Following the FfD3 side event in Addis, GFI President Raymond Baker praised Mbeki’s leadership on the issue and called on other regions to follow Africa’s example: “President Mbeki has been a driving force in the success of the HLP and in getting heads of state in Africa and the West to pay much more attention to the issue of illicit outflows draining potential investment and tax revenue out of the continent. This work is going to have a significant impact on Africa’s financial future, and other regions should form similar panels that will aggressively promote awareness and understanding of their respective IFFs.”
The third FfD Conference is being held in Addis Ababa, Ethiopia from July 13–16; the SDGs will be finalized during the UN General Assembly meeting in New York this September. GFI Managing Director Tom Cardamone is in Addis pushing for a target of curtailing illicit financial flows by 2030.
