Message from the Executive Director
Dear readers and friends of TrustAfrica,
Welcome on board this new venture from TrustAfrica. We thank you for coming on board the “Stop the Bleeding” bandwagon, which is a platform for civil society actors working to end illicit financial flows (IFFs) from Africa. Our campaign is an African campaign with agency from Africans in all walks of life. Our call to you is to sign the petition on this website and become an actor for change to stop the haemorrhage slowing down Africa’s pace towards progress. Please, read on.
Africa loses approximately US$50 billion annually through Illicit Financial Flows (IFFs). Several studies, including the report from the High Level Panel on Illicit Financial Flows, working under the African Union and Economic Commission for Africa (AU/ECA) say that Africa lost over US$1 trillion through IFFs in the last 50 years – an amount equivalent to Official Development Assistance in the same period.
Many, including ourselves at TrustAfrica, have always been cautiously optimistic about the over dramatised narrative of “Africa Rising” especially as it mostly uses Gross Domestic Product (GDP) as a measure of growth. Other Human Development indicators such as Gross National Income (GNI), access to affordable health care, education, and decent jobs are rarely considered in the ongoing optimism surrounding Africa.
Whilst GDP growth has indeed been above an average of 5% for most of Africa, we rarely get insights into how African economies are structured and also a discussion on who benefits from this growth. One salient fact about the growth is that it comes largely from the global commodity super cycle and to some extent the boom in the telecommunications industry. Enterprises that produce and trade in the commodities are mostly large multinationals domiciled outside of Africa. They enjoy tax holidays, revenue repatriation arrangements and relaxed labour laws. Revenue repatriation agreements allow companies to remit their revenues to the head office, but this practice is NOT part of IFFs.
Beyond the benefits cited above, these large companies are the drivers of illicit financial flows. According to the AU/ECA report, the most common practices of IFFs include trade mispricing, under-invoicing of exports, exaggeration of import values, and general tax avoidance schemes. IFF processes are very complex in nature. Some of the reports we have published attempt to expand upon these processes only to restate that such practices are costing Africa about US$50 billion per year – approximately 68% of Kenya’s GDP.
Human development, inclusive of access to quality health provision, education, jobs and decent standards of living remains out of reach for many Africans. The benefits of the current growth cycle have been highly unequal and limited mostly to higher income earners. More and more Africans perish in the Mediterranean every year trying to enter Europe in search of greener pastures. We also know that about US$50 billion is needed annually to fund infrastructural projects despite the steady decline in Official Development Assistance (ODA).
The AU’s Agenda 2063 underlines improved domestic resource mobilisation as a key pillar for Africa’s sustainable and inclusive development. It is in this light that we at TrustAfrica, alongside our friends and partners within civil society, are calling for a new development compact underpinned by transparency, accountability and equity.
We aim at collecting a million signatures against an opaque global economic system that accommodates IFFs. It is morally reprehensible for economic actors to continue engaging in these harmful practices at the expense of Africa’s future. We need sufficient public energy and an outcry for an immediate end to these practices. Our governments and regional processes should play their part in fast tracking mechanisms and laws for compliance with the new thinking.
Dr Tendai Murisa is the Executive Director of TrustAfrica