Reports of Illicit Financial Funds from the East African States in the years of 2004 – 2013!
After reading a Forbes article on Illicit Financial Funds leaving Ethiopia, as they question the need for and the use of donor aid to Ethiopia. I had to read the reports that it partly was based and make my own assumptions. The difference is that I want to focus on the East African Nations and their Illicit Financial Funds that leaves the States. So that the values and the amounts show’s lack of governance and regulation of finance gives way for the African governments and corporations to get away with transferring funds without legal bounds. This is a way of misusing funds and also money laundering through lacking revenue service and authorities to keep up the upkeep of the states. Take a look!
“IFFs are illegal movements of money or capital from one country to another. GFI classifies such flows as illicit if the funds crossing borders are illegally earned, transferred, and/or utilized. If the flow breaks a law at any point, it is illicit” (GFI, 2015).
“African governments have a political interest in IFFs because these flows impact their national development aspirations and encroach on state structures. They therefore have law enforcement and regulatory agencies whose duties include preventing IFFs. Among these are the police, financial intelligence units and anti-corruption agencies. Governments also have customs and revenue services and other agencies whose purposes are thwarted or hindered by IFFs” (IFF, P: 35, 2016).
“The widespread occurrence of IFFs in Africa also points to a governance problem in the sense of weak institutions and inadequate regulatory environments. IFFs accordingly contribute to undermining state capacity. To achieve their purposes, the people and corporations behind IFFs often compromise state officials and institutions. Left unchecked, these activities lead to entrenched impunity and the institutionalization of corruption” (IFF, P: 51, 2016)
“Most African countries do not have enough highly trained lawyers, accountants and tax experts to carry out the oversight functions to prevent or punish perpetrators of illicit financial outflows. The few that exist are often overworked and unable to prepare sufficiently to take on top-class representing large corporations” (IFF, P: 72, 2016).
Illicit Financial Funds ranking in the years of 2004 – 2013:
| Nation | IFFs | Ranking |
| Burundi | $87m | 124 |
| Congo (DRC) | $225m | 107 |
| Djibouti | $375m | 96 |
| Ethiopia | $2,583m | 46 |
| Eritrea | $38m | 133 |
| Kenya | $83m | 125 |
| Rwanda | $359m | 97 |
| Somalia | $0m | 147 |
| Sudan | $1,311m | 67 |
| Tanzania | $482m | 90 |
| Uganda | $715m | 78 |
*(in millions of U.S. dollars, nominal)
* Global Financial Integrity December Report 2015
Total IFFs in the years of 2004 – 2013 (GER+HMN)
| Nation | Total IFFs |
| Burundi | $866m |
| Congo (DRC) | $2,254m |
| Djibouti | $3,745m |
| Ethiopia | $25,835m |
| Eritrea | $115m |
| Kenya | $829m |
| Rwanda | $3,589m |
| Somalia | $0m |
| Sudan | $13,115m |
| Tanzania | $4,820m |
| Uganda | $7,149m |
*(in millions of U.S. dollars, nominal)
* Global Financial Integrity December Report 2015
* “Trade misinvoicing (GER) dominates measurable illicit outflows, averaging 83.4 percent of total illicit outflows during the years 2004 to 2013. However, there has been a noticeable growth in the hot money narrow (HMN) estimate of balance of payment leakages over those years as well. Though initially only accounting for 6.9 percent of illicit outflows in 2004, HMN rose to 19.4 percent of illicit flows by 2013” (GFI, P: 10, 2015).
If you look at the charts there are some monies that is missing and gone away on all sorts of schemes and tax exemptions, all sort of added invoicing or other types of financial instruments to make sure the monies doesn’t end where they are supposed to be. The East African states have misused giant amount of funds.
Ethiopia, Sudan and Uganda are topping the list. What is weird for me and the report it is not specifying the Sudan as the Khartoum republic or putting South Sudan alone! So the report and the values put on South Sudan, which was independent in 2011, there do not know what of part of Sudan who has illicit funds. Still, the values and the amount of million dollars Illicit Financial Funds (IFFs) from Ethiopia for instance. You can wonder how much of the government budget that is eaten by this sort of financial mismanagement and misuse of public funds. The reserves and state coffers have to be hit when it is these amounts of dollars that are lost. Uganda have also gotten rid of giant amount of funds, these is 10 higher than the revelation during the Oil Probe with the 2.4 Trillion shillings, which is about $640-700m dollars. That we’re oil revenue that has not been remitted to the state, just these values is ten-times of what was revealed in the Ugandan courts. So there is other revenue that the State House, Bank of Uganda and Uganda Revenue Authority not have complied to or have registered as there is a loss of $7,149 million dollars.
These is just two financial instruments as the HMN and the GER that is explained under the table, the other ways of misusing funds, I haven’t even covered. This is just how much that is miss-invoicing and Hot Money Narrow, the others can be shown at another time. The numbers shown here alone show the extent of misuse of funds in a decade. That is the public loss and the state coffers that been looted by the regime and their lack of will of following and regulating the financial markets. Therefore, the state and institutions does not have the will or capacity to follow the money. This shouldn’t be evident, but it is and not a good look. Peace.
Reference:
Illicit Financial Flows iff – ‘Report of the High Level Panel on Illicit Financial Flows from Africa’
Global Financial Integrity – ‘Illicit Financial Flows from Developing Countries: 2004-2013’ (December 2015)
