Members of the Partnership on Illicit Finance (PIF) met alongside the African Development Bank at the Bank’s Annual Meetings in Lusaka, Zambia, to publish national action plans to combat illicit finance, review member countries’ priorities for addressing illicit finance stemming from corruption and other criminal activities, and share experiences with countries interested in joining the Partnership.

African Development Bank President Akinwumi Adesina voiced the institution’s strong support for the Partnership and encouraged other African countries to join current members Burkina Faso, Kenya, Liberia, Mauritius, Niger, Senegal, Sierra Leone, and the United States in developing national action plans to combat illicit finance. 

Corruption and illicit finance in Africa continue to undermine democracy, constrain investment, reduce stability, thwart economic development, and disenfranchise African populations who should benefit from Africa’s tremendous growth potential.

Launched at the 2014 U.S.-Africa Leaders Summit and reaffirmed at the July 2015 Third International Financing for Development Conference, the Partnership brings together countries committed to tackling corruption and to developing strategies to eliminate opportunities for illicit finance. 

Under the Partnership, countries are developing and implementing tailored national action plans to combat illicit finance. These plans will guide country-specific action to fight illicit finance stemming from corruption and other crimes, and will reinforce efforts to build developing countries’ capacity to mobilize domestic resources and attract private sector investment. Countries’ national action plans are being posted on the African Development Bank website.

United States urges more African countries to join ‘Partnership against Illicit Finance’

More African countries should sign-up to the ‘Partnership on Illicit Finance’ (PIF), Marisa Lago, Assistant Secretary for International Markets and Development in the US Treasury, said while speaking as a panelist in a session at the AfDB Annual Meetings in Lusaka.

Since its establishment almost two years ago, just eight African countries have joined as members; these include Burkina Faso, Kenya, Liberia, Mauritius, Niger, Senegal, Sierra Leone and the United States.

At a side event on the fourth day of the AfDB meetings, representatives of the eight member countries sat on a panel whose purpose was to launch their respective national plans on what they intend to do to combat illicit financial flows.

However, there was no launch as it emerged that only two of the eight members, Senegal and the United States, had completed drafting their national plans.

Rotich Henry Kiplagat, Kenya’s Minister of Finance, when asked by the session moderator about the progress of his country’s national plan against illicit financial flows, said it would be ready, ‘very soon.’

A representative from Liberia informed the panel that her country had finalized preparing the framework for the national plan; however, she noted that her government needed help to address serious ‘capacity challenges especially in the national revenue body.’

Without any plans to launch, the session was spent by panelists discussing their respective efforts in combatting corruption and general illicit trade in their countries.

Concluding remarks were provided by Lago, who underscored the need for African countries to unite and coordinate their efforts in the fight against illicit financial flows.

“This is a partnership of the willing. While we encourage more countries to join the partnership, it is important for current members to finalize their national plans so that we embark on implementation,” she said.

AfDB pledges firm support

The President of the AfDB, Akinwumi Adesina, who delivered the opening remarks, pledged the Bank’s support to African efforts in combating illicit financial flows out of the continent and called for more accountability and transparency in the management of public resources.

“We are talking about development, but development needs resources. Whether its health, education or infrastructure, it doesn’t matter what you are talking about; it all requires money,” said President Adesina.

President Adesina noted that although the money to finance development is available, it is literally stolen and ends up in individual pockets.

He commended the support from the US Treasury noting that international cooperation is important in helping African countries to counter the deep pockets of multi-nationals that get away with committing tax injustice because they have the best legal brains in the world as their tax-lawyers.

Adesina wants to see more support going to people engaged in exposing illicit trade operations and finances such as whistle blowers, civil society, parliaments, tax administration and the press.

“Africa may have a lot of poor people, but we are by no chance a poor continent. In terms of the value of the discovered natural resources that Africa has, it is about US $82 trillion,” he said, adding that with proper management and exclusive usage of the resources, poverty can be defeated.

He said the African Development Bank is currently developing its own strategy in how it can provide technical support and capacity building to support in the fight against illicit flows and said he is looking forward to working with the US Treasury in these efforts.

Through its African Natural Resources Centre, the AfDB, Adesina said, is already providing technical support and expertise to African countries on how to sustainably manage their natural resources in inclusive ways that benefit the countries’ citizens.

“We also have the Africa Legal Support Facility, which has smart lawyers that help countries review agreements and advise on how to negotiate,” he said.

The session heard that tax fraud and evasion account for the vast majority of illicit financial flows from Africa and that these flows deprive governments of essential revenues needed for development.

A joint study conducted by the Bank Group and the Global Financial Integrity (GFI) found that between 2000 and 2009, some US $30.4 billion per annum flowed out of Africa, mostly in the form of IFFs.

According to GFI, Africa loses more to illicit flows than what it gets in donor aid. The statistics indicate that for every US $1, poor nations receive in development aid, an estimated US $10 flows illicitly abroad.

During the U.S.-Africa Leaders’ Summit in July 2014, African leaders and President Obama agreed to establish the Partnership on Illicit Finance to combat illicit finance and the damage it causes to the people of Africa. The commitment to this partnership was re-affirmed during the Financing for Development conference in July 2015. 

Earlier this year, in February, PIF members met in Dakar, Senegal, for a workshop to discuss and refine draft action plans a head of a Sub-Ministerial Meeting in Washington in the margins of the World Bank-IMF Spring Meetings.

The aim of the session at the AfDB meetings on Thursday was to review the progress made thus far in the development of those action plans and to share experiences with countries that are yet to subscribe to the partnership.

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Background

Illicit finance is draining Africa’s resources, perpetuating aid-dependency and undermining the ability of Africa to craft a development agenda that reflects its realities and priorities. The human and physical investments needed for Africa's transformation require addressing illicit finance as a priority.

The objective of PIF is to:

1. Examine and Make Recommendations Concerning Illicit Financial Activities in Africa: The Partnership members will continue to examine reliable sources to better understand the range and scope of corruption and other unlawful activities related to illicit financial activities in Africa. Based on this work, the working group created inside PIF will continue to identify recommended actions to help prevent and respond to these types of illegal activities. These recommendations will be largely focused on further strengthening and prioritizing the implementation of existing international standards or commitments established by the African Union, United Nations, G-7, G-20, Financial Action Task Force (FATF), and other relevant groups.

2. Develop Individual Action Plans: Participating countries have committed to publishing national action plans that articulate a number of country-specific pledges that, when taken, will help prevent the generation and movement of proceeds from corruption and other crimes. Each government has committed to consult with the private sector and civil society to forge these country-specific, action-oriented commitments.

3. Implementation and Monitoring: Participating countries have also expressed interest in regularly assessing their progress towards implementation or fulfillment of these pledges, and updating their action plans accordingly.

As of May 2016, members of PIF include Burkina Faso, Kenya, Liberia, Mauritius, Niger, Senegal, Sierra Leone, and the United States.