November 01, 2024
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Namibia sets up taskforce to deal with illicit financial flows

May 11, 2022
Namibia sets up taskforce to deal with illicit financial flows

The Ministry of Finance says Namibia has established an interagency task force to tackle illicit financial flows (IFF).

 Deputy Finance minister Maureen Hinda-Mbuende said the Bank of Namibia will serve as the Lead Agency in fighting the scourge. 

“As a first step the interagency Task Team with the assistance of the office of the United Nations Resident Coordinator in Namibia will commence with a pilot study as one of 12 African Jurisdictions to measure IFF, that pilot study will be concluded soon,” she said, adding that the development shows the Namibian government's commitment to addressing IFF. 

“It is evident that the national efforts to stem out Illicit Financial Flows are receiving attention of the highest order and signify our commitment as a country to mobilize our domestic resources and thereby lessen our dependence on foreign aid,” Hinda-Mbuende told an illicit financial flows workshop. 

“The current intervention comes at an opportune time where promises of several natural endowments have been announced. It is thus important that Namibia must ensure that we mitigate the threat of Illicit Financial Flows.” 

IFFs are a development challenge, raising serious constraints to financing development. They constitute a drain on Africa’s revenues by diverting resources from social spending and productive investment. 

The Deputy Finance minister said the reduction of capital outflows will increase the stock of capital available for business to build productive capacity and create jobs. 

“Reduction of IFFs will also ultimately increase tax revenue, which could provide governments with additional fiscal space to deal with socio-economic problems facing the continent,” she said. 

Hinda-Mbuende singled out the extractive sector, which she said had been found to be the biggest culprits when it comes to IFFs.

 “The dependence of African countries on natural resources extraction for exports and revenues makes us extremely vulnerable to illicit financial flows. These Sectors are prone to IFFs, trade mispricing including abusive transfer pricing, secret and poorly negotiated contracts and overly generous tax incentives, among others,” she said.

 “Moreover, it is true that most African Countries lack the necessary capacities to independently verify the value and precise amounts of natural resources extracted and exported. At times also lack the capacity to collect and administer resource payments. 

In the case of extractives, due to unfamiliarity with the level and variability of costs involved in the sector, Government regulators especially in new producer countries but also in older producers are challenged to adequately assess revenues and validate claims made by oil, gas

and mining companies against their capital and operating activities.” 

According to the UN Conference on Trade and Development in a report published in September 2020, Africa loses about US$88.6 billion in illicit capital flight every year – equivalent to 3.7% of the continent’s gross domestic product.

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Last modified on Thursday, 12 May 2022 21:40
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