Former president Thabo Mbeki is calling on central banks, civil society and heads of state to play their part in curbing illicit outflows, which are estimated at $90 billion a year on the African continent.
Speaking to the media during a briefing at the Thabo Mbeki Foundation this morning, Mbeki said the commercial sector is responsible for two thirds of capital illicit outflows – money leaving the continent illegally.
The other third comes from criminal activity such as human trafficking, drug dealing and corruption.
Mbeki said that money was leaving the continent through a number of ways including: base erosion/profit shifting, misinvoicing and tax havens.
The findings come after the establishment of a commission – set up in 2012 – made up of ten representatives from African countries, of which Mbeki was the chair.
The commission’s report was adopted with recommendations in January 2015.
The initial findings of the commission put the figure of money leaving illegally at $50bn, but trade statistics published by the International Monetary Fund indicate that the number is now closer to between $80bn and $90bn.
“This could either be because more thorough work has been done or in fact there is in actual increase in the activity.”
Mbeki said that a consultation process was underway with other countries and financial institutions such as the Organisation for Economic Co-operation and Development (OECD) and the European Central Bank.
He said the OECD agreed to work with the African Union panel in tracking and reducing the illicit outflows and to measure whether any progress has been made in reducing the activity through their efforts.
“This money is not leaving the continent in plastic bags, it goes through financial systems,” he said.
“Central banks have a role to play in terms of tracking money which goes through their systems.”
The former president said that a great level of enthusiasm had been shown by heads of state in Africa to bring an end to the scourge.
“There is a keenness on the continent to deal with the matter because as a head of state you may find that you now have an extra two billion in your budget to work with.”
Mbeki said that he also welcomed the Panama papers exposé as it raised the issue that tax havens must be dealt with.
