Illicit Financial Flow — Report of the High Level Panel on Illicit Financial Flows from Africa


FOREWORD: The 4th Joint African Union Commission/United Nations Economic Commission for Africa (AUC/ECA) Conference of African Ministers of Finance, Planning and Economic Development was held in 2011.


This Conference mandated ECA to establish the High Level Panel on Illicit Financial Flows from Africa. Underlying this decision was the determination to ensure Africa’s accelerated and sustained development, relying as much as possible on its own resources.

The decision was immediately informed by concern that many of our countries would fail to meet the Millennium Development Goals during the target period ending in 2015. There was also concern that our continent had to take all possible measures to ensure respect for the development priorities it had set itself, as reflected for instance in the New Partnership for Africa’s Development. Progress on this agenda could not be guaranteed if Africa remained overdependent on resources supplied by development partners.

In the light of this analysis, it became clear that Africa was a net creditor to the rest of the world, even though, despite the inflow of official development assistance, the continent had suffered and was continuing to suffer from a crisis of insufficient resources for development.

Very correctly, these considerations led to the decision to focus on the matter of illicit financial outflows from Africa, and specifically on the steps that must be taken to radically reduce these outflows to ensure that these development resources remain within the continent. The importance of this decision is emphasized by the fact that our continent is annually losing more than $50 billion through illicit financial outflows.

This Report reflects the work that the High Level Panel on Illicit Financial Flows has carried out since it was established in February 2012, particularly to:

  • > Develop a realistic and accurate assessment of the volumes and sources of these outflows;
  • > Gain concrete understanding of how these outflows occur in Africa, based on case studies of a sample of African countries and;
  • > Ensure that we make specific recommendations of practical, realistic, short- to medium-term actions that should be taken both by Africa and by the rest of the world to effectively confront what is in fact a global challenge.

It would not have been possible for our Panel to do its work without the enthusiastic support of all our interlocutors as we worked to discharge our mandate. I would like to take this opportunity to convey our sincere and warm thanks to all those for everything they did to contribute to the success of the work of our Panel. Here I am referring to:

  • > The heads of state and government and the governments of all the African countries we visited, as well as the president and government of the United States;
  • > Leaders of the legislatures in many of these countries;
  • > The leadership and staff of the international organizations with which we interacted, these being:
    • – The United Nations, at its New York Headquarters, as well as the United Nations Member States;
    • – The World Bank and the International Monetary Fund at their headquarters in Washington, DC;
    • – The World Customs Organization at its headquarters in Brussels, Belgium;
    • – The Organisation for Economic Co-operation and Development at its headquarters in Paris, France;
  • > The European Parliament in Brussels, Belgium;
  • > Civil society, including the business community, in the African countries we visited, as well as in the United States; and,
  • > Members of the media in many of these countries
  • We also extend our sincere thanks to the leadership and staff of ECA for their excellent contribution in providing our Panel with absolutely vital expert intellectual and logistical support.

I am also privileged to convey my heartfelt gratitude to my fellow panellists, drawn from all regions of Africa, as well as the committed and principled friends of Africa from the United States and Norway, who formed the outstanding collective responsible for this Report.

All these eminent persons, members of the Panel, have worked with great dedication, honesty and determination to serve the people of Africa.

Objectively, it is practically impossible to acquire complete information about illicit financial flows, precisely because of their illicit nature, which means that those responsible take deliberate and systematic steps to hide them. This also means that ECA and everyone concerned should continue to carry out research on this matter, including making generally available all new relevant information that will inevitably emerge.

Despite the challenges of information gathering about illicit activities, the information available to us has convinced our Panel that large commercial corporations are by far the biggest culprits of illicit outflows, followed by organized crime. We are also convinced that corrupt practices in Africa are facilitating these outflows, apart from and in addition to the related problem of weak governance capacity.

All this should be understood within the context of large corporations having the means to retain the best available professional legal, accountancy, banking and other expertise to help them perpetuate their aggressive and illegal activities. Similarly, organized criminal organizations, especially international drug dealers, have the funds to corrupt many players, including and especially in governments, and even to “capture” weak states.

All these factors underline that the critical ingredient in the struggle to end illicit financial flows is the political will of governments, not only technical capacity.

Further, illicit financial outflows whose source is Africa end up somewhere in the rest of the world. Countries that are destinations for these outflows also have a role in preventing them and in helping Africa to repatriate illicit funds and prosecute perpetrators. Thus, even though these financial outflows present themselves to us Africans as our problem, united global action is necessary to end them. Such united global action requires that agreement be reached on the steps to be taken to expedite the repatriation of the illicitly exported capital. This must include ensuring that the financial institutions that receive this capital do not benefit by being allowed to continue to house it during periods when it might be frozen, pending the completion of the agreed due processes prior to repatriation.

It also means that concrete steps should be taken to give general universal application to such best practices as might have developed anywhere in the world. This includes the relevant actions and initiatives that have been taken by such institutions as the OECD, the G8 and G20, the European Parliament and the African Tax Administration Forum.

Correctly, the United Nations is leading the process to engage the international community to design the Post-2015 Development Agenda, the successor programme to the Millennium Development Goals. As was foreseen in the Millennium Development Goals, giving credibility to the Post-2015 Development Agenda will require realistic expectations about the availability of resources to finance this agenda—a new and real commitment to the objective of financing for development.

Our Panel is convinced that Africa’s retention of the capital that is generated on the continent and should legitimately be retained in Africa must be an important part of the resources to finance the Post-2015 Development Agenda.

We do not say this to support the entirely false and self-serving argument against capital transfers from the rich to the poor regions of the world, including Africa—a historically proven driver of equitable global development.

Rather, we are arguing that there exists a very significant and eminently practical possibility to change the balance between the volumes of domestic and foreign capital required for meaningful and sustained African development.

The radical reduction of illicit capital outflows from Africa, short of ending them, is precisely the outcome Africa and the rest of the world must achieve to produce this strategically critical new balance.

As a Panel we are convinced that the goals of ending poverty in the world, reducing inequality within and among nations, and giving practical effect to the fundamental objective of the right of all to development remain vital pillars in the historic process to build a humane, peaceful and prosperous universal human society.

We commend this humble Report to our immediate Principals, the African Finance, Planning and Economic Development Ministers, all the other African authorities and the people of Africa, as well as to the rest of the world, as a contribution to what must be an honest, serious, concerted and sustained African and global effort to build a better world for all.

Thabo Mbeki


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