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Thabo Mbeki: Mining sector leading in Illicit financial flows

BUSINESS
By Graham Kajilwa | Sep 16th 2015 | 2 min read
By Graham Kajilwa | September 16th 2015
BUSINESS

Mining corporations in the East African Community (EAC) region are the leading agents that aid siphoning of resources to foreign countries.
The illegal activity has been made rampant because of the region's dependence on extraction of natural resources as the main source of revenue.
Secret and poorly negotiated contracts, mispricing, overly generous tax incentives, and under-invoicing have been cited as some of the means through which the illicit financial flows crimes are committed.
Speaking at the first follow up meeting after the adoption of the Report of the High Level Panel on Illicit Financial Flows held in Nairobi, former South African President Thabo Mbeki said African nations have been rendered poor by such corporations that evade paying billion in taxes.
"This happens at the expense of development projects in the region. If these monies were retained in the respective countries, African countries' would not be facing simple challenges in health care and poverty," said Mbeki addressing the media in Nairobi.
Mbeki said that lack of financial transparency in such dealings, which in many cases is carried out by government officials limits the efforts put in place to fight the Illicit Financial Flows (IFFs): "That is why we made political leaders in East Africa, West and Central Africa, North Africa and South Africa regions to be responsible for their nations."
Among the recommendations adopted from the report is that all Africa Union Assembly Heads of State should give annual reports on the progress made in capacity building to fight IFFs. This will involve country to country sharing of financial information within the region clusters to increase transparency.
According to the Economic Commission for Africa, African nations lose over Sh5 trillion (USD 50 billion) annually through the IFFs. Kenya lost Sh160 billion (USD I.6 million) up to 2011. However, this is only the amount that is traceable as there are many black market activities in illegal arms and human trafficking that facilitate the IFFs trade.
Mbeki further called on governments in the region to establish strong regulations in tax collection and customs: "We need to be seen as the first ones in implementing what we believe in. This may be an African problem but it will provide a global solution."

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