Illicit Financial Flows and the Extractives Sector on the African Continent: Impacts, Enabling Factors and Proposed Reform Measures
In this article I will describe illicit financial flows (IFFs) in the context of the extractives sector in Africa. I will summarizetheir adverse economic, political and environmental impacts and identify gaps in current legislation and policy; and weaknesses in national tax systemsI propose specific actions to strengthen effectiveness of current legal and regulatory measures, achieve policy coherence,and increase domestic resource mobilization.Definition of Illicit Financial Flows
The definition of the term 'illicit financial flows' (IFFs) is debatable. As per the normative interpretation, IFFs is "capital taken abroad in a hidden form, because it might be illegal, or goes against the socially acceptable standards, or it might be susceptible to economic and political threats." IFFs can also be defined as "money illicitly earned, transferred or utilized," including corruption, money laundering, tax evasion and tax avoidance
In this essay the term ‘illicit financial flows’ is intended to encompass any or all of the activities noted in the definitions above.
IFFs and sustainable development
Illicit financial flows and measures to combat them are complex areas of international and national economic, development, security, and the rule of law policy. They affect (and are affected by) many wider policy objectives and involve many disparate actors across a variety of governmental and non-governmental policy disciplines. Therefore, there is a risk that policies which regard to illicit financial flows might be incomprehensible or badly coordinated and that their implementation may result in lack of sustainability, unintended consequences, and competing priorities because of this risk. Consequently, illicit financial flows are a priority area for Policy Coherence regarding to Sustainable Development.
Regarding their essentialityas a disabler of development efforts, the Sustainable Development Goals framework consolidates IFFs. According to the Sustainable Development Goals target 16.4, it aims at significantly reducing the unlawful capital flight and arms flows to strengthen recovery and the return of stolen assets as well as combating organized crimes.Additionally, the IFFs are reflected directly only to one target which is related to Goal 16 which addresses peace and justice, but they relate to many other targets that are central to the sustainable development agenda.
ASAP Journal permits its authors to post submitted or published essays on personal websites or institutional repositories while mentioning the essay’s current status with the journal.