, NAIROBI, Kenya, Sep 7 – Illicit financial flows out of Africa hit $70 billion (Sh7 trillion) in 2015 raising concerns of the scale and negative impact such outflows have on the continent’s development and governance agenda.
Speaking during the ongoing Africa Green Revolution Forum in Nairobi International Fund for Agriculture Development President Konayo Nwanze says this is a huge increase from the $50 billion (Sh5 trillion) reported in 2014.
Nwanze urged African countries to shape up their governance structures in bid to protect their economies.
“African countries need to build institutions that survive political instability, they need to adopt laws, regulations and policies that encourage transparent financial transactions,” he explained.
The number, he said, is double the official development assistance that the continent receives.
According to the United Nations Economic Commission for Africa some of the effects of illicit financial outflows are the draining of foreign exchange reserves, reduced tax collection, cancelling out of investment inflows and a worsening of poverty.
The Commission states that the outflows are facilitated by some 60 international tax havens and secrecy jurisdictions that enable the creating and operating of millions of disguised corporations, shell companies, anonymous trust accounts, and fake charitable foundations.
Other techniques used include money laundering and transfer pricing.
Nwanze was speaking when he received the First Africa Food Price Awards, for mobilising institutional reforms, innovative policies and programmes and increased resources to improve the lives of millions.
The $100,000 (Sh10 million) award is funded by the Alliance for Green Revolution in Africa and celebrates Africans who are taking control of Africa’s agriculture agenda.
According to the awards committee chaired by the former president of Nigeria Olusegun Obasanjo, the prize recognises Zwanze for his successful efforts at IFAD that include overall increase in IFAD’s portfolio of loans and grants, its ongoing investments in Africa from US$1.3 billion at the start of Nwanze’s tenure to $2.7 billion in 2015-benefiting more than 75 million rural people.