Africa’s extractive industries sector is central to the illicit outflow of money from the continent, former South African President Thabo Mbeki has said.
Mbeki made the remark during the just-ended, fact-finding mission of the High-level Panel on Illicit Outflow of Money from Africa in the Democratic Republic of Congo (DRC).
Building on the experience gathered from all countries, Mbeki said the team would recommend actions to be taken to halt the illegal transfers and to get illegally transferred funds repatriated to the continent.
During their three-day stay in DRC this week, Mbeki and his team met with President Joseph Kabila, Prime Minister Augustin Matata Ponyo and eight other senior government officials to discuss the nature of illicit cash outflow from the resource-rich country and what the state was doing about it.
Technically supported by the UN Economic Commission for Africa (ECA), the panel’s trip to DRC was part of a continent-wide and global campaign to help stop the huge illegal cash outflows from Africa – a phenomenon which is helping to delay the continent’s socio-economic transformation.
According to DRC Prime Minister Ponyo, there is a direct link between conflict, the exploitation of mineral resources and the illegal transfer of capital from his country.
He told the high-level panel that the DRC government started efforts to fight the phenomenon of illegal money outflow in 2004 through the regulation of foreign currency exchange, enactment of laws to reduce the practice while boosting transparency in banking transactions, as well as cooperation with international partners in view of recovering illegally transferred capital.
According to the ECA, “the faces of illicit monetary outflows” include kickbacks and other forms of corruption involving civil servants; criminal activity such as drug and money trafficking and money laundering; as well as fraudulent commercial transactions such as tax evasion, distortion of money transfer charges and over-billing, especially by transnational firms.
Currently, it is estimated that Africa loses at least US$ 50 billion yearly to illicit financial flows – a figure that exceeds the Official Development Assistance it receives.