Tuesday, April 23, 2024

Illicit financial flows kill Batswana babies

The people and companies that spirit billions of pula out of Botswana cause the country’s under-5 child mortality rate to go up by 14.20 percent yearly. As a result of these illicit financial flows (IFFs), it will take Botswana five more years to reduce child mortality rate by two-thirds as envisioned by Millennium Development Goal 4. These are the findings of the High Level Panel on Illicit Financial Flows from Africa, which is jointly run by the United Nations and the African Union and chaired by former South African president, Thabo Mbeki. IFFs have become a sore point with those concerned about the welfare of African people.

One study, which Mbeki’s panel considered, explored the potential impact of IFFs on under-five child and infant mortality. MDG 4 expresses the desirability of reducing by two-thirds, between 1990 and 2015, the under-five mortality rate. This study looked at the potential reduction in years required for 34 African countries to reach MDG 4 if IFFs were eliminated, as compared with current rates of progress in meeting those goals. Without IFFs, Botswana would be able to reach MDG 4 in 11 years compared with 16 years at the current rates of progress.

Generally, if IFFs had been arrested by the turn of the century, Africa would reach MDG 4 by 2016. Annually, the continent loses more than US$50 billion through illicit financial outflows. Over the last 50 years, Africa is estimated to have lost in excess of $1 trillion in IFFs. The result is that Africa has become a net creditor to the rest of the world, even though, despite the inflow of official development assistance, the continent had suffered and was continuing to suffer from a crisis of insufficient resources for development.

The African Tax Administration Forum estimates that up to one-third of Africa’s wealth is being held abroad. This wealth and its associated income are beyond the reach of African tax authorities, thus depriving countries of resources that could be used to mitigate inequality. In Botswana, it is estimated that IFFs constitute 10 percent of GDP. The culprits are individuals and organisations that, according to Mbeki’s panel, “devote considerable effort to activities that seek to increase their profitability through tax evasion and avoidance rather than through making their operations more efficient.”

Mbeki himself says that “the information available to us has convinced our Panel that large commercial corporations are by far the biggest culprits of illicit outflows, followed by organized crime. We are also convinced that corrupt practices in Africa are facilitating these outflows, apart from and in addition to the related problem of weak governance capacity.”

These corporations have the means to retain the best available professional legal, accountancy, banking and other expertise to help them aggressively perpetuate their illegal activities. Similarly, organized criminal organizations, especially international drug dealers, “have the funds to corrupt many players, including and especially in governments, and even to ‘capture’ weak states.”


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