Illicit financial flows (IFFs) cause enormous wealth losses for developing nations, a danger to their progress.
IFFs have disastrous effects in Africa since huge amounts of money are squandered annually, which could be utilized to support public services that benefit the entire population, especially the younger generation, and to finance sustainable development projects. Youth must take a leading role in the fight against this evil.
African countries lose US$50 billion to illegal financial flows, according to the 2015 High-Level Panel on Illicit Financial Flows from Africa.
Given this, the Panel recommended many policies for adoption by African nations.
But even after these suggestions were made more than six years ago, IFFs continue to be a significant problem for many African nations.
According to a more recent UNCTAD study, the average annual value of IFFs in Africa is $88.6 billion.
This amounts to roughly 3.7% of the gross domestic product (GDP) of the continent (UNCTAD 2022).
This amounts to almost twice the official development assistance that Africa receives, which are US$54 billion and US$48 billion, respectively (UNCTAD 2022).
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These estimates may not be precise because complete data for all transactions and all African countries is lacking.
Due in large part to their magnitude and detrimental effects on Africa's development and governance agenda, illicit financial flows out of the continent have drawn significant attention.
A startling 18.8 million girls in Africa do not complete their elementary education, according to the report "Transforming Education Financing in Africa: A Strategic Agenda for the African Union Year of Education."
The research goes on to say that aggressive tax evasion by the wealthiest individuals and corporations, coupled with abnormally low tax rates, cost Africa US$29 billion annually in lost educational funding.
This indicates that young people are disproportionately impacted by IFFs because, in the absence of IFFs, it is they who should gain from the principles of good governance, such as having access to adequate funding for their education.
Many ideas have been put up to stop the flow of illicit money through Africa, but the most crucial one is the political will to guarantee that workable solutions are put into place for the good of our people.
According to the High-Level Panel, stopping illicit financial flows is a political matter.
This means that to stop illicit financial flows, African governments must show a strong political commitment to passing and upholding strict laws and regulations, bolstering the institutions and agencies in charge of handling IFFs, improving financial transaction transparency and accountability, collaborating regionally and internationally to share intelligence and best practices and to protect whistleblowers and support investigative journalism.
This is essential to overcome corruption and complicity among officials' limited capacity and resources, resistance from vested interests, and the complexity of IFFs, involving sophisticated networks and secrecy
A common barrier to both economic performance and the accomplishment of development objectives in Africa is a lack of political will.
The lack of political will is attributed to weak institutions, lack of capacity, fear of retribution, limited public awareness, and many more.
Dzobo et al (2021) contended that many of the problems that bedevil Africa right now, ranging from the political, economic, and social mess are because of its feeble institutions and the generally unchecked power of its political leaders.
As a result, political leaders have been using illicit financial flows to maintain political power and influence, making it difficult for political will to be enhanced.
Some African leaders also prioritise economic growth over combating illicit financial flows, which can be seen as a necessary evil for economic development.
Many African governments are also plagued by corruption, and illicit financial flows are often linked to corrupt activities
In addition, African countries lack the resources, expertise, and institutions to effectively combat illicit financial flows and this contributes to a lack of political will in fighting illicit financial flows.
According to the United Nations Economic Commission for Africa (2015), Africa does not have the necessary laws or the necessary capabilities to halt illicit financial flows.
It goes on to say that developing nations frequently have regulatory agencies with insufficient capability and gaps in them, which results in lax regulation and encourages illegal activity.
It takes political leadership to start and maintain reforms over time until desired outcomes are realised.
Those in positions of authority must act in the interests of the people rather than their own.
They are the primary players who must give the battle against IFFs first priority as they enact legislation and assign the authority, resources, and personnel necessary to ensure their successful enforcement.
By doing so, they will be displaying their commitment to openness, responsibility, and the welfare of their citizens.
But for many years, the need for political will has only been spoken; people in positions of authority lack the moral fiber to implement it. This makes it necessary to cultivate political will rather than just talking without doing anything, but the continent is still mired in extreme poverty.
Most studies have indicated that youth in Africa bear the brunt of the effects of IFFs. This means that young people in Africa must actively participate in building political will to combat illegal cash flows.
Youth have been instrumental in bringing about progress in Africa throughout history, both before and after independence.
Youth played a crucial role in nationalist movements, independence campaigns, and the fight against colonialism. Organizations like the African National Congress Youth League (ANCYL) in South Africa and the Kenya African Union Youth Wing mobilized young people to fight for independence.
In post-independent Africa, many African leaders, such as Julius Nyerere (Tanzania) and Thomas Sankara (Burkina Faso), were young when they came to power and implemented significant development policies.
Movements led by young people advocated for social change and human rights, such as the anti-apartheid campaigns in South Africa and Nigeria.
Concerning this, the African youth of today have an assessment to complete: what part are they playing in carrying out constructive development?
The youth of today should be actively involved in this moral issue of political will to stop illicit cash flows, as they hold the future of Africa in their hands.
To start, young people in Africa can educate themselves and other people on tax justice, the effects of tax evasion and other IFFs on the continent's development, and more. Youth who raise awareness can create a movement that calls on leaders to take action.
Social media, campus activities, and community outreach should be used in conjunction with this to spread the word.
Youths also need to prioritize anti-IFF measures through action and campaigning on their behalf. Campaigns, petitions, and nonviolent demonstrations can raise awareness of the problem. Their voice can be amplified through collaborating with civil society organisations. This also entails aiding organisations that promote tax justice and transparency. This also entails forming alliances and exchanging tactics and expertise with colleagues around Africa. A strong force for change can be created via unity and group efforts.
In the fight against IFF, young people should assume leadership positions, engage in the formulation of public policy, and hold authorities responsible.
To guarantee their thoughts are heard, they can participate in internet forums, attend community meetings, and join political parties, among other decision-making venues. Africa's young people must use technology and innovation to fight IFFs.
Tracking and exposing IFFs can be made easier by building digital platforms, apps, and data analytics.
In conclusion, Africa's youth possess the ability to cultivate political determination to combat IFFs. Youths should demand action from leaders and start a movement for change through activism, education, leadership, creativity, and teamwork.
African youths should guarantee that Africa's resources are utilized for development rather than being misappropriated through IFFs by banding together. Africa's youth's united efforts will determine its future.
- Dzobo is policy analyst.
- These weekly articles published are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Private) Limited, past president of the Zimbabwe Economics Society and past president of the Chartered Governance and Accountancy Institute in Zimbabwe (CGI Zimbabwe). Email – [email protected] or Mobile No. +263 772 382 852
