Illicit outflows of capital crippling Africa

Rhodes>Law>Latest News

Illicit outflows of capital crippling Africa
Illicit outflows of capital crippling Africa

Over 50 years Africa has lost an estimated $1-trillion at around $50 billion annually through illicit financial overflows. In 2011, African ministers of finance, planning and economic development convened by the African Union and the UN Economic Commission for Africa formed a high level panel to investigate and make recommendations about what Africa should do to stop illicit capital outflows that constitute a major obstacle to development efforts.

A report was later released and adopted by the AU in 2016 stating that $50-billion is an underestimate as it excludes such elements as trade in services, proceeds of bribery and trafficking in drugs, people and firearms.

Chief Executive Officer of the Thabo Mbeki Foundation Max Boqwana has taken the report further to ask: what can lawyers do to save African resources in his compelling lecture as visiting fellow of the Law Faculty. In a room full of law students and practitioners, Boqwana made it clear that illicit capital outflow is a human rights issue that goes as far back as slavery and colonialism.

“Poverty and under-development remain Africa’s biggest and painful struggle. Young, old, rural and urban, educated and illiterate Africans need to understand that Africa continues to be robbed of its minerals, human and financial resources,” he said.

Dipping back into history, Boqwana reminded his audience that the industrialisation of Europe and the US was largely based on the use of cheap African labour and minerals. The continued invasion and abuse of the continent has ensured that generations of Africans are trapped in poverty under the pretence of political freedom.

“Africa has always been an extension of colonial powers. The produce was always for the consumption and development of colonial countries. We adopted systems of governance that justified and legitimised wholesale looting of African resources. We have simply now made the ownership of resources in the continent a little more sophisticated.”

He continued to identify the players that need to collaborate in an ethical and moral re-generation that will prevent the stunting of Africa’s development through money laundering, tax evasion and organised crime.

For him, the biggest culprits are African leaders who “lack mental emancipation from colonial systems that have a devastating impact on their countries”. But his main focus was on the need for activist lawyers, diligent accountants, and patriotic investigative journalists who not only expose and condemn illicit transactions, but also assist with the development of a new conscience with a pragmatic action plan.

The report was well received from the panel led by former president Thabo Mbeki in the AU Summit in Ethiopia. The Global Financial Integrity, an organisation involved in intensive research on illicit capital overflows enthused that, “the report represented a historic moment in an effort to fight Africa’s most pernicious economic problem. This is a turning point in the movement to curtail illicit overflows and the promotion of transparency at home and abroad”.

As an ethical legal practitioner, Boqwana put his hand up in this movement to ensure that lawyers, accountants and citizens prevent and report underhanded deals of diverting money away from the African economy.

He asks, “Why would Africa continue to bleed so much of its resources when it has lawyers and auditors who are ethical and adhere to the highest standards of due diligence and are needed to stop facilitating corruption?”

He admits that large commercial enterprises/corporations have always been the biggest winners in countries with corrupt leadership. Corruption, as a political matter, requires decisions from various levels of government to be made.

Boqwana made an example of the empirical evidence of trade mispricing, incorrect invoicing by companies such as Lonmin, a London SA based mining company that has been moving money to overseas countries since the year 2 000.

“You then have to understand why the Marikana massacre happened,”.

“There is going to be a time when we will run out of gold and diamonds and we would not have created any secondary and tertiary industries to sustain the livelihood of our people,” he warned.

He concludes that, if there is no civil and professional outrage over illicit financial overflows, the working poor will continue to work towards paying the continent’s debts because it is the working that get taxed, and their prospects of growth become a distant possibility.

For the full report click on the link below: