Tackling illicit financial flows – can Africa rise to the challenge?
At this year’s Africa Mining Vision day, some of Africa’s most influential mining industry leaders and government counterparts debated strategies to counter Illicit Financial Flows (IFFs) from the mining sector in order to boost domestic resource mobilization.
Held on the margins of Mining Indaba, the Africa Mining Vision Day session consisted of a number of activities, including a panel that examined gaps in the design and implementation of key instruments used in mineral-rich countries to mobilize domestic revenues.
“As such mobilization grows ever more important for Africa’s long-term development, curbing IFFs becomes an increasingly urgent issue,” noted the session. Estimates by the United Nations Economic Commission for Africa (ECA) show that, between 2000 and 2010, more than half (56.2%) of the IFFs from Africa came from the extractive sector.
Giving a pan-African perspective, African Union Commissioner for Trade and Industry, Fatima Haram Acyl, said, “An effective mineral-led industrialization strategy will therefore require new ways of looking at Africa’s rich minerals and metals endowment.”
Panel members underscored that achieving the transformative potential of Africa’s resources requires a new way of thinking about minerals which aligns with the continent’s owned priorities of industrialization and diversification through value addition, processing, beneficiation and the creation of strong mineral led linkages with other sectors of our economies.
The session, which is a feature of Mining Indaba’s annual Africa Mining Vision Day/Ministerial Symposium, was hosted by the African Minerals Development Centre (AMDC). AMDC has also recently published a major report on new approaches to tackling IFFs as a follow-up to the AUC/ECA High Level Panel on IFFs, led by former South African President Thabo Mbeki.
Estimates by United Nations Economic Commission for Africa show that, over the period 2000-2010, more than half (56.2%) of the IFF from Africa came from the extractive sector and highly concentrated in few countries. The African Union High Level Panel Report on Illicit Financial Outflows estimates that over $50 billion leave the continent annually. Global Financial Integrity assesses that as a share of GDP, the continent bears the most disproportionate burden of cross-border unrecorded financial outflows approximating 8.6 percent of its GDP.
The AMDC report, ‘Impact of Illicit Financial Flows on Domestic Resource Mobilization: Optimizing Africa’s Mineral Revenues’, published in January 2017, provides policy recommendations on illicit financial outflows from the mineral sector in Africa. The related 2016 report, Optimizing Domestic Revenue Mobilization and Value Addition of Africa’s Minerals, is available to download below.
Africa Mining Vision (AMV)
Formally adopted by African heads of state in 2009, the AMV puts Africa’s long term and broad development objectives at the heart of all policy-making concerned with mineral extraction. It is the continent’s own response to tackling the paradox of great mineral wealth existing side by side with pervasive poverty.
The African Minerals Development Centre (AMDC) works with Member States of the African Union (AU) to fast-track alignment of their mineral sector development to the Africa Mining Vision, to achieve better developmental outcomes. AMDC currently work with more than half of all AU Member States.