The South African Economy is being plagued by Illicit Financial Flows (IFFs) and, that’s why the country’s currency is persistently weakened and almost constantly unstable, Minister David Mahlobo opines.
According to the State Security Minister, about R80 billion is being illegally ferried away out of South Africa every year. Mr Mahlobo lamented that South Africa is one of the countries in Africa with high illicit financial movements.
He specified that a transaction is illicit when the funds are illegally earned, moved or utilised via trade mispricing, bulk cash movements and smuggling.
Minister Mahlobo contended that all the activities linked to IFFs aggravate the weakening of the rand. The weakening, he said, resulted in the increase in gold prices in both legal and black markets.
Mr Mahlobo further pointed out that the increase in gold prices is tantamount to an increased incentives for illegal miners which also means more illicit financial flows out of the country.
“Over the years, it is clear that the South African economy has been affected negatively by decades of transfer pricing and other forms of illegal capital flight by multinational companies, especially those who operates in the extractive industries.
“A significant amount of cash was detected leaving the South African borders to foreign jurisdictions and this is estimated at R80 billion per annual in Illicit Financial Flows (IFFs),” Minister David Mahlobo wailed.
However, he assured the government of South Africa that his department will work harder towards providing economic intelligence that will support the government’s efforts in tackling IFFs.
“We have also extended our focus to include exploration of economic opportunities to the benefit of our people. In this regard, we look forward to working with the Treasury, SARS, DTI and the Financial Intelligence Centre in curbing this scourge,” he disclosed.
Above all, Minister David Mahlobo expressed that corruption is posing a “serious and direct threat” to reconstruction and development initiatives.
To him, good governance, service delivery, and stability, especially at local level, cannot be attained if corruption isn’t completely eradicated.