AFDB’S ACADEMY AND ILLICIT FUNDS FLOWS

Illicit financial flows are damaging Africa’s economic fabric, argues Tommy Odemwingie

Throwing money at problems often appears as the easiest approach to development. It affords the opportunity to show physical signs of development. That was why it found traction with some African leaders in the early years of Independence. Two examples are enough as simulation scenarios: 

•To redress low agricultural output, establish government farms; import huge tractors and build huge silos. So, why has food insecurity overrun Africa? 

•For health care delivery, establish big hospitals in cities and import large socks of drugs. So why are preventable infections and epidemics still ravaging the continent and still claiming lives in millions?

The fascination with gigantic structures was never matched by human capacity development. That’s why Ajaokuta and Nigeria’s four refineries have become metaphors for governmental missteps in building gigantic structures without building commensurate human capacity around them.

Based on insights from different perspectives, there’s palpable concern at the rate at which illicit financial flows (IFFs) are damaging Africa’s economic fabric. According to the Economic Development in Africa Report 2020 by the UN Conference on Trade and Development (UNCTAD), Africa loses about US$88.6 billion, 3.7 per cent of its gross domestic product (GDP), annually in illicit financial flows. The High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda (FACTI Panel) report released in February 2021 cautions on IFFs — from trade mis-invoicing, tax abuse, cross-border corruption, and transnational financial crime.

The UN Office on Drugs and Crime (UNODC), in its Strategic Vision for Africa 2030 launched in February 2021, notes that illicit financial flows remain a key impediment to Africa’s attainment of the 2030 Agenda and the African Union Agenda 2063. Given the multidimensional and transnational nature of IFFs, significant domestic resources – illicitly acquired and channeled out – pose a continent-wide development challenge. Stemming the inflow and outflow of money-laundering linked to terrorism, organized crime, corruption and other crimes would make a significant contribution to economic growth, the vision states.

In a nutshell, according to the report, IFFs are draining resources from sustainable development, as well as worsening inequalities, fueling instability, undermining governance, and damaging public trust.

No institution shares this concern more than the AfDB. So, what’s the institution doing about a very bad situation that is different? It is quite clear that African Development Bank (AfDB) subscribes to the notion that to solve a developmental problem, rather than just throw money at it, the most efficacious approach is to understand its dimensions and ramifications, as well as identify solution sources.

“The AfDB strongly supports Africa’s economic efforts; including efforts to stem corruption, improve transparency, and strengthen fiscal consolidation and efficiency,” President of AfDB, Akinwumi Adesina, said at a workshop on 24 April 2023. The workshop on “Role of Parliaments in Combating Illicit Financial Flows from Africa” was organized by the African Development Bank (AfDB) in Abuja. He was represented by AfDB Senior Nigeria Country Director, Ebrima Faa.

Last week, the African Development Institute, an affiliate of AfDB, organized an executive training on “Enhancing Accountability, Transparency and Curbing Corruption and Illicit Financial Flows in Africa”. It was part of its structured training on Public Finance Management Executive Training, provided by the its Public Finance Management Academy (PFMA).

The configuration of partnership for the training underscores the broad perspectives on, and concert of concern to respond to the challenge of, IFFs. The training facilitators were certified experts drawn from collaborating anchor institutions and partners, and the Public Financial Management Academy’s Policy Lab Unit. The training was co-delivered by experts from the AfDB, the IMF, the World Bank, the FATF-Style Regional Bodies, the African Tax Administration Forum (ATAF), African Organisation of English-speaking Supreme Audit Institutions (AFROSAI-E), OECD – Global Forum on Transparency and Exchange of Information for Tax Purposes, the Extractive Industries Transparency Initiative (EITI), Global Financial Integrity (GFI) and Financial Action Task Force (FATF).

Beneficiaries of the training include senior technical officials of national and sub-national governments in the Ministries of the Economy, Finance, Budget, and Planning, Central Banks, and other institutions in charge of public financial management in all African countries; as well as key anti-corruption, IFF/AML/CFT institutions, Registrar Generals, and statistical offices. 

The overarching theme of the training was on “Enhancing Accountability, Transparency and Curbing Corruption and Illicit Financial Flows in Africa”, with following topics designed to address the critical issues:

•Conceptual Issues on Accountability, Transparency, Corruption, and Illicit Financial Flows; and b. Drivers of corruption, money laundering, illicit financial flows and other financial crimes in Africa. 

•Institutional, Regulatory and Legal Frameworks for Fiscal Transparency, Anti-Corruption and curbing Illicit Financial Flows. 

•International Accounting and Auditing Standards for Enhancing Transparency and Accountability. 

•The role of audits — Internal Auditors and Supreme Audit Institutions (SAIs) – in assuring Integrity of the public financial management system.  

•Role of the Legislature and Judiciary in ensuring accountability in public financial management and AML/CFT/IFFs.

Leveraging e-governance and civil society for Fiscal Transparency, Accountability, and Combating Corruption and Illicit Financial Flows. 

•Importance of Beneficial Ownership Information Disclosure in promoting transparency, curbing financial crimes and improving revenue. 

•International collaborations and standards for combating corruption, IFFs and other financial crimes.

The workshop also involved experience sharing across jurisdictions for improved accountability, transparency, anti-corruption and curbing illicit financial flows and an engagement meeting of Debt Management Officers from African countries that is expected to lead to the establishment of the Africa Debt Managers Initiative Network (ADMIN). 

The specific outcomes of the workshop expected include: Improved capacity to design and implement robust institutional, policy, legal and regulatory frameworks to curb IFFs.

Improvement of the capacity of accountability institutions, including the SAIs and PACS, to audit, investigate and report the financial transactions of government and actors in the public finance domain.

Enhanced capacity for the monitoring and enforcement of measures to curb corrupt practices and illicit financial flows in Africa through trade, activities of multinational corporations, and natural resource exploitation. 

Enhanced awareness and capability of country authorities to take advantage of international collaborative mechanisms for enhancing transparency and accountability in curbing IFFs. 

Improved peer-to-peer learning and networking amongst participants on enhancing Accountability, Transparency and Curbing Corruption and IFFs in Africa.

These are outcomes that will now translate to increased capacity for decisive onslaught on a monstrous threat to economic development in Africa 

Thus, AfDB’s strategy of deploying the sledgehammer of massive resources to capacity strengthening ensures that multidisciplinary and multisectoral weapons are amassed in the battle against IFFs. The training will enable the battle rage in different countries in which AfDB and other international development institutions are helping to advancing economic and social progress to enhance the quality of human life. It ensures that interventions are tie-tested; their impacts are measurable and successes are scalable.

Development professionals share the sentiments expressed by Prof. Kevin Chika Urama, AfDB’s Chief Economist and Vice President for Economic Governance and Knowledge Management, that the training is bound to be impactful because it targets critical operators in participating countries’ public finance authorities, such as debt management and budget offices. These are responsible for regulations, management approvals and initiations and dissemination of guidelines.

 Odemwingie, a former features editor of The Guardian, is an international development communication expert