Addressing illicit financial flows (IFFs), revenue mismanagement and corruption is one of four imperatives highlighted by UN secretary-general António Guterres that must be enacted to ensure that the benefits of mineral resources reach all people in society, not just elites, while safeguarding the natural environment.
Speaking at the Global Roundtable on Transforming Extractive Industries for Sustainable Development, the secretary general was reinforcing the UN’s efforts to play a lead role in curbing IFFs, in which misinvoicing in the extractives sector is seen as a key economic development challenge for resource rich developing countries.
Technological revolution
Guterres listed improved governance of extractive resources, including for independent monitoring and addressing IFFs, revenue mismanagement and corruption as the first of his four imperatives.
“This is especially important regarding new minerals and metals on which the technological revolution depends”, he said.
Revenue capture and international coordination
The UN chief’s second imperative is that countries must reduce their dependency on revenues from the extractive industries by diversifying their economies and adapting tax systems while his third focused on the need for more investment in a low-carbon future.
Greater regional and global coordination to “manage shocks and ensure a smooth, just and sustainable transition process”, was the UN chief’s final imperative.
UN efforts against IFFs
The UN’s work on IFFs includes a landmark report published last year by the United Nations Conference on Trade and Development (UNCTAD) which provides an extensive study into IFFs out of Africa that it estimates to amount to around US$89 billion annually (Trade-based Financial Crime, 9 October 2020).
The UNCTAD report, Tackling Illicit Financial Flows for Sustainable Development in Africa, highlights the impact of underinvoicing.
Extractive export underinvoicing in Africa is, on average, equivalent to 16 per cent of merchandise exports of the commodities according to the report, Tackling Illicit Financial Flows for Sustainable Development in Africa, which is the latest in UNCTAD’s annual Economic Development in Africa series.
The UNCTAD report, Tackling Illicit Financial Flows for Sustainable Development in Africa, can be found here.
Categories: Trade Based Financial crimes News
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