Former President Thabo Mbeki said on Monday that illegal outflows of money has cost the African continent more than $80bn (R1.16trn) a year.
From what Mbeki told reporters in Johannesburg yesterday, originally the figure was given as $50bn which was derived from statistics from the International Monetary Fund (IMF), but after further inquiry, the figure rose to an estimate of between $80bn and $90bn.
Former President Mbeki once chaired the African Union panel which looks into illegal outflows from the African continent.
The work of this AU panel was concluded last year and recommendations were proffered on how to put a stop to these illegal outflows.
Mbeki said the proffered solutions may be adopted globally even though they were originally made for Africa.
“We need to find a way of tracking these outflows so that we are able to measure whether the measures are working, leading to a reduction of the outflows.
“If we can’t measure, we can’t say if we (sic) making progress.”
Mbeki said the panel had met and discussed the matter with other foreign bodies like – US authorities, the IMF, the World Bank, the European Central Bank, the European Parliament and the Organisation for Economic Co-operation and Development.
Various strategies are used by the corporate world to effect these illicit outflows, like some companies used ways such as tax havens and transfer pricing and as such, Central banks needed to come on board to help monitor the outflow of funds from countries.
Mbeki emphasized on the role of Central banks in terms of monitoring and tracking money which goes through their different countries.
“This money is not leaving the continent in plastic bags, it goes through financial systems,” he said.
Also, tax authorities on the African continent needs to be strengthened to avoid institutional weaknesses.
According to his analysis, two-thirds of these illicit outflows could be attributed to commercial companies and one-third goes to criminal activities such as trafficking, drugs, weapons and corruption.
Mbeki added that the report by the panel on illicit outflows from Africa had raised the issue of tax havens which was illustrated by the Panama Papers.
“They became a destination of these illicit outflows. We have had exposure in the Panama Papers.”
“Maybe some of them, the money is legal and people may be putting money in tax havens for whatever reason. But what is also true is that people who expatriate capital from a country illicitly would use the same tax havens…
“We are happy the matter of Panama Papers was exposed,” Mbeki said.