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Tackling IFFs: the role of African legislators

(NAIROBI, Kenya, April 20, 2015) The Tax Justice NetworkAfrica (TJN-A) and the Malawi
Economic Justice Network (MEJN) in collaboration with the Chairperson of the Natural Resources
and Climate Change Committee of the Malawi Parliament, will be hosting the second meeting of the
African Parliamentarian Network on Illicit Financial Flows and Tax (APNIFFT).
The two-day conference will be held from May 5 6, 2015 in Lilongwe, Malawi on the theme
Tackling IFFs: the role of African legislators.
In the aftermath of the multiple global economic crises which have triggered an avalanche of austere
measures in rich economies, aid budgets have suffered severe cuts. Exports of African economies
have also vacillated amidst growing joblessness and deteriorating basic social services.
As a consequence, the need for a stronger focus on domestic resource mobilisation and promotion of
alternative sources of responsible and more reliable finance for development. Illicit financial flows
(IFFs) are draining the African continent of huge resources for development. They are also
detrimental to revenue mobilisation efforts and social cohesion. Abusive transfer pricing and related
commercial activities attributed to multinational companies (MNCs) operating in Africa represent a
significant source of this outflow. Indeed, the net outflows from African countries, including the
proceeds of tax evasion, outweigh inflows of aid and investment.
The report of the AU/ECA High-level Panel on Illicit Financial Flows from Africa chaired by former
South African President, Thabo Mbeki reveals that Africa loses an estimated US$50 billion to
US$148 billion each year through illicit financial flows.
The study, Financing Africas Post-2015 Development Agenda show that, from 1970 to 2008,
Africa lost US$850 billion to US$1.8 trillion in illicit financial flows.
According to the Global Financial Integrity (GFI), Africa lost up to US$1.5trillion between 1980 and
2009 through IFFs, up to two thirds of these outflows are from the extractive sectors across Africa.
Yet, African countries need all the resources they possibly can raise domestically to address systemic

threats and invest in post-2015 sustainable development agenda to structurally transform economies
on the continent to improve the quality of life.
A renewed political momentum globally to tackle IFFs through various international initiatives
including changing the global tax rules is currently led by the club of rich countries, Organisation for
Economic Co-operation and Development (OECD) under the auspices of the G20. However, current
efforts are neither broad nor deep enough as they are narrowly focused on measures to deal with Base
Erosion and Profit Shifting (BEPS). CSOs from Africa and across the world have called for the
introduction of international standards such as the Automatic Information Exchange, Country-byCountry report and transparency of beneficiary ownership.
At continental and national levels African governments now recognise the crippling impacts of IFFs
and aggressive tax practices by MNCs to domestic resource mobilisation and the development efforts
of their countries, hence the President Thabo Mbeki-led panel.
A structural transformation of the continent will require an adequate, predictable, sustainable and
integrated financing mechanism geared towards financing developmental goals. Additionally, Africa
needs to embark on deliberate and concrete reforms to capture currently unexplored or poorly
managed resources. Central to this is curtailing IFFs and transforming these funds into a powerful
tool for enhancing domestic resource mobilisation to spur the continents development.
As public officials, and especially the peoples representatives, entrusted with the mandate to
promote and protect the well-being of their constituencies, parliamentarians are well placed to shape
policy to enhance domestic resource mobilisation as well as ensure that tax revenues are invested in
the needs of the population.
Tax is already the largest source of public finance in developing countries. African countries, for
example, raise over 10 times more revenue through taxation than through aid. If all African countries
raised just 15 per cent of GDP in revenue, the continents governments would have an additional
US$200 billion at their disposal annually. The key challenge is for African countries to take
measures to raise the tax to GDP ratio. One of these steps is to mobilise domestic resources through
taxation. Others include reining in illicit outflows of capital and ensuring a fairer share of natural
resource rents.
This meeting is thus designed to strengthen African legislators engagement and role in tackling
illicit financial flows from Africa. The meeting will update MPs on recent developments in African
on illicit financial flows and the post-2015 process, brainstorm and develop an APNIFFT programme
of work for the rest 2015 as well as agree on coordination mechanisms between APNIFFT and CSOs.
Participants include 20 MPs from all five major regional economic blocs in Africa, officials of the
Economic Commission for Africa, Africa CSOs working on IFFs and the media.

For further information, kindly contact Kwesi Obeng, Communications and Campaigns Officer at TJN-A at:
kobeng@taxjusticeafrica.net (+254 728279368) and/or Malawi Economic Justice Networks June Kambalametore at:
jkambalametore@mejn.mw (+265 881112858)