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Global discussions on illicit financial flows hit a snag

Financing for Development meeting fails to give the global combat against capital outflows much- needed impetus.

NEW YORK, 24 May 2017 – The Illicit financial flows (IFFs) debate has taken a hit at the second Financing for Development follow-up Ministerial Meeting in New York this week. Building on the inaugural FfD Forum, which devoted particular attention to setting up the monitoring framework for the follow-up to the Addis Ababa Action Agenda (Addis Agenda), the 2017 Forum is expected to provide impetus for the implementation of FfD outcomes and the delivery of means of implementation of the 2030 Agenda for Sustainable Development.

However the meeting disappointed significantly on the issue of illicit financial flows (IFFs). Members of the Financial Transparency Coalition attending the series of meetings- including Tax Justice Network Africa- remained concerned on the lack of seriousness in addressing the IFF agenda. Despite the continued havoc caused by illicit financial flows—and repeated scandals exposing financial secrecy— the week’s outcome document falls woefully short on these issues.

This week’s meeting failed to acknowledge the ground breaking work by the UNECA/EU High Level Panel, Chaired by H.E. Thabo Mbeki, on IFFs and “relegates the study findings and recommendations to a mere footnote in the outcome document”, said Jason R Braganza, Deputy Executive Director at TJNA. It is estimated that Africa loses up to USD 70 billion through IFFs annually and this impacts significantly on the countries on the continent to sustainably finance their own development and are therefore forced to increase taxes; increase their indebtedness; in order to bridge their financing gap.

Speaking on the side-lines of the Ministerial meetings, Mr. Braganza went on to say that the meeting also failed to fully acknowledge the need for a broadened definition of IFFs to include tax avoidance and other abusive tax practices such transfer pricing and trade misinvoicing. He reiterated that, “Developing countries, especially in Africa, are losing millions of dollars annually through such practices and as such the international development community needed to take into consideration how to curb these practices in order to support sustainable financing for development.”

TJNA together with other civil society organisations reiterated the need for the creation on global intergovernmental tax body to safeguard against abusive tax practices. Braganza further underscored this point: “The meetings this week indicated a significant loss of political leadership of the UN in tackling abusive tax practices and IFFs while ‘the group of rich countries’ leave New York with the initiative, and this needs to change urgently.”

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Michelle Mbuthia



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About TJNA

The Tax Justice Network-Africa (TJN-A) is a Pan-African initiative and a member of the Global Alliance for Tax Justice. Launched in January 2007 during the World Social Forum (WSF) held in Nairobi, TJN-A promotes socially- just, accountable and progressive taxation systems in Africa. It advocates for tax policies with pro-poor outcomes and tax systems that curb public resource leakages and enhance domestic resource mobilisation.

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