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Submitted by Web Master on 27 May 2015

Africa loses a big chunk of money as a result of illicit financial flows (IFFs).  Different studies have indicated that these IFFs are responsible for draining the African continent of resources for development and are detrimental to revenue mobilization efforts. For example the recent report by the High Level Panel on Illicit Financial Flows (AU/ECA HLP) from Africa, show that the continent loses more than $50 billion annually through IFFs. Such astounding figures are a case for serious concern, given that taxation is the most sustainable source of development finance, but African tax systems still do not raise enough revenue to meaningfully finance their own development.

These outflows of revenue from Africa are said to be higher than the amounts received annually in development aid and much greater than the amounts raised annually by most African governments in taxes. It can therefore be suggested that should these IFFs stop, Africa can stop being a net debtor and turn into a net creditor. The Global Financial Integrity for example has estimated, that Tanzania lost 2.5 billion euros between 2002 and 2011 due to transfer mispricing by companies. This is such a huge amount of money that would have contributed significantly to improvement of social services delivery in the country.

Due to these serious concerns, the Tax Justice Network – Africa (TJN-A) and the East African Tax and Governance Network (EATGN) organized a two days round table meeting to discuss strategies and agree on concrete steps that can be undertaken by different actors to ensure the domestication and implementation of the report recommendations in national policy. The meeting also aimed at providing space particularly for CSOs to exchange ideas and map out opportunities for mainstreaming into already ongoing fiscal policy reforms at the national level. This meeting was held from Thursday 21st to Friday 22nd May 2015 in Nairobi, Kenya. It drew together different stakeholders mostly from the CSOs community to discuss and strategize on how best we can work both individually and collectively to curb IFFs.

Throughout the discussions, it became apparent that CSOs need to work together with their government to ensure that the commitment by our governments to implement the recommendations contained in the HLP report is realized. Committing to implement the recommendations is one thing and real implementation of these recommendations is another thing. Based on the experience that most of the times these commitments are political, there is a need for CSOs to engage and push for implementation.

The discussion also called for more engagements with the Ministers for Finance as well as revenue authorities in the respective countries. However, for these engagements to be meaningful more research is needed so that we have strong base to back our arguments.

To this end, we call for our Minister for Finance as she looking forward to attend the financing for Development Conference in Addis Ababa in July to raise into discussion these issues of IFFs so that there is an international commitment to end these harmful acts globally and regionally and help in raising domestic revenues. More important is the need for a call for increased transparency of the international and national tax systems in order to regulate, monitor and increase the accountability of tax systems