African IFFs by UNCTAD

Geneva, 4 January 2022 (TDI):  It is estimated that Africa squanders substantial resources as a result of illicit financial flows (IFFs). Many sources lead to them, including illegal activities, tax avoidance, profit shifting, trade misinvoicing, and corruption, among others.

UNCTAD announced that IFFs divert resources away from social development and make it difficult to finance development in Africa. These risks are recognized in the 2030 Agenda for Sustainable Development, specifically in Sustainable Development Goal 16.4.

The Addis Ababa Action Agenda calls for redoubling efforts to reduce international financial flows by 2030. Illicit financial flows are currently unmonitored according to an internationally established method.

Several Action Agenda points call for the publication of estimates of the volume and composition of illicit financial flows by international institutions and regional organizations.

The absence of reliable and objective evidence can produce policy interventions difficulty and undermine efforts to eradicate illicit financial flows.

With the participation of UNODC and ECLAC, UNCTAD and the ECA are developing the following statistical methods for estimating IFFs:

Discovering Origins and Size of IFFs

Based on the evidence, a targeted and effective policy response can be developed. To reduce IFFs over the extended term, the participating countries have to improve their monitoring capabilities.

There will be a publication of the statistical methodology traditionally used in this ambitious project as well as insights gained from its extensive testing in nine African countries. UNCTAD and UNODC will develop a global methodology for measuring IFFs and the related indicator 16.4.1 of SDG 16.

Constructive feedback will be provided to UNCTAD and UNODC in order for them to develop a global methodology for measuring IFFs and the related indicator. The experts will continue to discuss the policy implications and present them at various platforms throughout the intergovernmental system.

Goals of the Project

Defining, measuring, and disseminating statistics on IFFs in order to contribute to the development of the data infrastructure for the 2030 Agenda for Sustainable Development and support evidence-based policy recommendations in this area would be a major contributor to strengthening the statistical capacities of African governments and other stakeholders.

Direct links to SDGs

Enthusiastically promote peaceful and inclusive societies for long-term development, ensure equitable access to justice, and develop effective, accountable, and inclusive institutions at all elevated levels.

The goal is to significantly reduce illicit financial, and arms flow by 2030, to strengthen asset recovery and return, and to combat organized crime in all its forms. As part of this objective, methodologies will be developed to measure the SDG indicator 16.4.1 (the number of illicit financial flows going into and out of countries in current US dollars).

The incidence of corruption, including bribery and corruption, must be drastically reduced. To strengthen the means of implementing sustainable development and revitalize the global partnership for sustainable development.

Furthermore, increasing the capacity of domestic tax and revenue collection systems, including providing international assistance to developing countries, by mobilizing domestic resources.

Planned Activities Include:

• Conduct research on methods for measuring IFFs.
• Hold international expert group meetings to discuss and agree on the concepts and methodologies for measuring IFFs.
• Plan national workshops to discuss challenges, relevant types of IFFs, and options for assessing them at the national level.
• Establishing guidelines for the development, collection, harmonization, and processing of data required for the measurement of IFFs.
• In nine African countries, the agreed-upon methodologies for measuring IFFs are pilot tested, and the guidelines are modified accordingly.
• Organize workshops to increase the capacity for collecting, collecting, analyzing, and disseminating IFF data and monitor the results.
• In support of target 16.4 in the 2030 Agenda for Sustainable Development, the findings and results are to be shared with statistical and policy forums to support the measurement of IFFs and evidence-based policy action.