Financial Transparency Coalition

In February 2012, the 4^th Joint African Union Commission (AU) United Nations Economic Commission for Africa Conference (UNECA) of African Ministers of Finance, Planning and Economic Development established the AU/ UNECA High Level Panel on Illicit Financial Flows (High-Level Panel) which set out to ensure that Africa’s development relies as much as possible on its own resources.

The High-Level Panel published a report in January 2015 which reflects its work to assess the extent and causes of illicit financial flows (IFFs), to understand how these outflows occur and to make recommendations to stop IFFs.

The report made 15 key findings on IFFs:

1. That they are large and increasing
2. That ending IFFs is a political issue
3. Transparency is key across all aspects of IFFs
4. Commercial routes for IFFs need closer monitoring
5. The dependence of African countries on natural resource extraction makes them vulnerable to IFFs
6. New and innovative means of generating IFFs are emerging
7. Tax incentives are not usually guided by cost-benefit analyses
8. Corruption and abuse of entrusted power remains a continuing concern
9. More effort is needed in asset recovery and repatriation
10. Money laundering continues to require attention
11. Weak national and regional capacities impede efforts to curb IFFs
12. Incomplete global architecture for tackling IFFs
13. Financial secrecy jurisdictions must come under closer scrutiny
14. Development partners have an important role in curbing IFFs from Africa
15. IFFs issues should be incorporated and better coordinated across United Nations processes and frameworks

The Tax Justice Network Africa (TJNA) together with the Pan-African Lawyers Union (PALU), as members of the Financial Transparency Coalition (FTC), developed a booklet to simplify and summarise the issues covered in the report and to create awareness about the problem of IFFs in general. While there have been many developments since 2015 when the report was launched, the simplification focuses on abridging the content of the report at the time and does not add new content except to explain terminologies and to offer links for further information.

“By reading this simplification you will quickly understand what IFFs are, how they happen and what is their impact. There is also a glossary to help you understand key terminologies and links to further information about other stakeholders working on various aspects of IFFs. We have used illustrations throughout to explain concepts such as the race to the bottom in tax competition, power relations at the policy table, beneficial ownership and trade misinvoicing among others” says Riva Jalipa, Policy Lead – Fair and Equitable Taxation, TJNA. “We hope you enjoy reading it!”