Transnational firms are central to Africa’s severe problems with illicit financial flows (IFFs) a UN official has said.
Aida Opoku-Mensah, a special adviser on SDGs to the UN Economic Commission for Africa (UNECA), told participants at a conference focused on stemming IFFs that these flows could stifle Africa’s quest to achieve the Sustainable Development Goals (SDGs) by the year 2030.
According to Opoku-Mensah, the continent loses approximately US$50 billion in tax revenues siphoned annually to offshore locations.
“This continued loss of resources is undermining Africa’s efforts to fund implementation of the SDGs,” Opoku-Mensah said during the Fifth Pan African Conference on Illicit Financial Flows and Tax, 2017.
A fundamental principle of the SDGs is to facilitate reliance on domestic resources and not foreign aid.
Most IFFs are initiated by multinationals operating in Africa according to UNECA.
“These transnational firms engage in transfer pricing, trade mis-invoicing, tax avoidance and evasion in order to lower their tax liability to African states,” said Opoku-Mensah, who singled out mining as the sector most likely to harbour IFFs.
“This is because most mining contracts are undertaken in secrecy and so governments don’t get their rightful share of royalties and profits,” she concluded.
Categories: Trade Based Financial crimes News