Africa burdened with illicit financial flows – Muchanga

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Mr Albert Muchanga
Mr Albert Muchanga

January 25, 2018 – African Union (AU) Commissioner for Trade and Industry Albert Muchanga has said Africa’s illicit financial flows have in the past years recorded a sharp increase, a situation he described as a burden for the continent.
Mr. Muchanga said the current statistics show that Africa is losing billions of dollars in illicit financial flows which today stand at US$80 billion as compared to the US$50 billion recorded in 2012.

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He was speaking today in Addis Ababa, Ethiopia when he addressed a media briefing dubbed, ‘combating corruption in the sectors of trade, industry, customs and mining’.
He explained that 70 percent of the loss recorded prevailed in the extractive industry such as mineral resources which are accounted for using the multinational corporations’ accounting practices.
Mr. Muchanga added that the accounting practices used in the illicit exercise include over-invoicing and mispricing.
The aim, according to Mr Muchanga, is intended to avoid paying taxes and declaring of dividends.
“In the process, virtually accrue all the benefits of mining at the expense of the jurisdictions where they are undertaking mining activities,” he explained.
According to Mr. Muchanga, some studies show that only 10 percent of illicit financial flows are directly attributed to corruption while others argue that the 10 percent breeds the 70 percent.

He informed the media that in order for Africa to ensure it benefits from the extraction of its mineral resources, the African Union Assembly of heads of state and government has taken action through the appointment of a high-level panel.
Former President of South Africa Thabo Mbeki is heading the high-level panel.
In addition, Mr. Muchanga said for maximum benefits, the African Union (AU) and United Nations Economic Commission for Africa (UNECA) through the African Minerals Development Centre put in place a number of instruments.

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Among the instruments put in place are an African Governance Framework (AMGF) charged with a responsibility to ensure mutual transparency and mutual accountability between governments and mining companies.
The objective of such an instrument is to ensure that Africa accrues the best benefits from her mineral resources.
The other instrument is the development of a model law for the fiscal regimes.
Under this mechanism, African Union member states are encouraged to adopt and implement coherent policies, prudent and strong legal regimes including regulatory frameworks to combat corruption in mining activities.
The AU Commissioner for Trade and Industry further explained that the instrument on the development of a model law for the fiscal regimes also demands to strengthen national institutions that are involved in revenue collection, budgeting, investment promotion and combating corruption.

“The Africa mining vision that was adopted in February 2009 by the heads of state and government is also assisting African Union member states to feed mineral extraction into manufacturing, infrastructure, agriculture as well as regional and continental integration as part of Africa’s structural transformation and economic diversification.
The resulting development of regional value chains will equip African countries with capacities to avoid competing against each other in commodity production and export as well in attracting investments,” Mr. Muchanga explained.
He cited Burkina Faso, Cameroon, Chad, The Republic of Congo, The Democratic Republic of Congo, Cote D’ Ivoire, Ghana, Guinea, Liberia, Mali, Mauritania, Mozambique, Niger, Senegal, Sierra Leone, Togo and Zambia as member states that are involuntary extractive industries transparency initiative which is aimed at enhancing accountability in the mining, oil and gas resource activities.
Mr. Muchanga concluded the briefing by stating that the department of trade and industry under the African Union Commission will play its part in ensuring that Africa wins the fight against corruption.

Mr. Muchanga was elected African Union Commissioner for Trade and Industry, a position he contested for during the 28th ordinary session of the African Union Assembly of the heads of state and government in 2017 in Ethiopia.
The 30th ordinary session of the Assembly of African Union heads of state and government summit will run from January 28th to 29th, 2018 in Addis Ababa, Ethiopia.
Vice President Inonge Wina will represent Zambia at this year’s African Union summit.
Mrs. Wina is expected to arrive in Addis Ababa, Ethiopia on Friday, January 26th 2018 at 20:30hours, Ethiopian Time.
“Winning the Fight Against Corruption: A Sustainable Path to Africa’s Transformation” is the theme for this year’s assembly.
ZANIS – Rosaria Lubumbashi-Simengwa in Addis Ababa

 

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