UN harps on diversification from extractive industries

•Africa loses $50b yearly as illicit financial flows

THE High Level Panel on Illicit Financial Flows of the United Nation Economic Commission has urged African countries to diversify their economies away from dependence on extractive industries into higher value activities.

  This, the panel said, would enable the continent tackle the issue of illicit financial flows from Africa.

  Specifically, the body stated that Africa may have been losing over $50 billion yearly to illicit financial flows.

  The panel said that this is approximately double the Official Development Assistance (ODA) that Africa receives and, indeed, the estimate may well be short of reality as accurate data does not exist for all transactions and for all African countries.

  Over the last 50 years, Africa is estimated to have lost in excess of $1 trillion in illicit financial flows (IFFs).

  Nigeria accounts for about 68.1 per cent of the total revenue Africa lost in a decade as a result of illegal transfer of revenues abroad.

  According to the report, which was released at the weekend by the United Nations Economic Commission for Africa, Nigeria remains the most populous country in Africa has seen rapid economic growth recently. “Its GDP has almost tripled to $490.857 billion. Its GDP per capita is $2,827, and its GDP growth averages 6.7 per cent. Oil exports remain a major contributor to Nigeria’s economy, but the telecoms industry accounts for more than a quarter of its 2014 GDP growth. Other drivers include manufacturing and film-making, which account for an estimated 7 per cent and 1.5 per cent, respectively. Agriculture is also a rapidly growing sector in the country. Having such a large economy inevitably increases the risks of IFFs,”, it said.

  The Chairperson of the panel said that the group is convinced that Africa’s retention of the capital that is generated on the continent and should legitimately be retained in Africa must be an important part of the resources to finance the Post-2015 Development Agenda.

  He stated: “We do not say this to support the entirely false and self-serving argument against capital transfers from the rich to the poor regions of the world, including Africa—a historically proven driver of equitable global development. 

  Rather, we are arguing that there exists a very significant and eminently practical possibility to change the balance between the volumes of domestic and foreign capital required for meaningful and sustained African development. The radical reduction of illicit capital outflows from Africa, short of ending them, is precisely the outcome Africa and the rest of the world must achieve to produce this strategically critical new balance. As a Panel we are convinced that the goals of ending poverty in the world, reducing inequality within and among nations, and giving practical effect to the fundamental objective of the right of all to development remain vital pillars in the historic process to build a humane, peaceful and prosperous universal human society”. 

  It said that it is important to pay attention to activities in the extractive sector in efforts to curb IFFs from Africa. “African countries need the capacities and technology to monitor extraction of their natural resources better and to negotiate contracts more effectively. They also need to make greater use of the information and support provided by voluntary existing mechanisms promoting transparency in the natural resource sector while calling for the adoption of mandatory global reporting requirements”.