Roundup: Africa needs concrete measures to address illicit financial outflows: experts

Financial experts have called for concrete measures to counter illicit financial flows out of Africa that are depriving the continent's much needed resources for development.

They made the call on Wednesday at the opening of the third edition of the African Export-Import Bank Annual Customer Due Diligence and Corporate Governance Forum in the Rwandan Capital Kigali.

Rwanda hosts the meeting from Wednesday to Thursday, under the theme "Sustainable Practices in Africa: Progress through Technology and Collaboration".

The forum organized by Afreximbank and the Rwanda Development Board has brought together financial experts, bankers, regulators and corporate entities to discuss current practices and evolving trends in customer due diligence and corporate governance.

Afreximbank is the foremost Pan-African multilateral financial institution devoted to financing and promoting intra- and extra-African trade.

"Financial crimes remain one of the greatest threats both to corporate and governments around the world. Over the last 50 years, Africa is estimated to have lost in excess of 1.7 trillion U.S. dollars in illicit financial flows. We need strong and concrete mechanisms in place to address this most challenging issue," said Claver Gatete, Rwanda minister of finance and economic planning.

He added that the sum is roughly equivalent to the official development assistance received by Africa in the same timeframe.

"Financial crimes exert dampening effect on global economic and financial space and undermine sustainable economic development. In the last two decades illicit financial flows have remained significantly high averaging around 40 percent," stressed Gatete.

"Stemming illicit financial outflows and preventing financing crimes will strengthen investors' confidence in Africa." he added.

The two-day event will also examine ways that African nations can leverage technologies, cross-border cooperation and collaboration among regulators, financial Institutions and corporates to build robust customer due diligence and good governance systems, according to organizers.

Dr. George Elombi, executive vice president of Afreximbank, warned that the most common sources of illicit financial flows are tax evasion and money laundering.

"We should develop counter measures such as institution building strategies, international cooperation and information exchange, and fiscal transparency. Illicit financial flows present an obstacle to development and its hurting Africa most," he noted.

Elombi stated that the root causes of financial crimes range from weak financial management systems, to political and macroeconomic instability, lack of financial liberalization, and greed for higher returns on investment.

At the forum, economists argue illicit cash flows deprive developing countries of the much-needed economic resources to transform their economies.

Africa Union estimates that Africa loses 50 billion U.S dollars a year in illicit financial flows that find their way to developed countries.

"Reducing these losses requires urgent and coordinated action. African governments should focus on strengthening legal institutions and anti-corruption laws and empowering regulatory agencies to exercise adequate oversight," emphasized Alex Kanyankore, chief executive, the Development Bank of Rwanda (BRD).

The Afreximbank Annual Customer Due Diligence and Corporate Governance Forum was first held in Dakar in October 2014. The second edition took place in Seychelles in 2015. Endit