Strategic Objective 3: To advocate for and mobilise support for formulation and implementation of rules and regulations to tackle Illicit Financial Flows from Africa
Africa still struggles to increase domestic resources in the face of high levels of capital flight and limited capacity to collect revenues from multinational corporations (MNCs), particularly those engaged in natural resource extraction. MNC practices are the main causes of illicit financial outflows from the continent and a major obstacle to Africa's domestic resource mobilization efforts, depriving her of crucial investable funds for addressing poverty and structural transformations. Capital flight and stolen assets from sub-Saharan Africa between 1970 and 2010 was estimated at US$ 814 billion, exceeding both Official Development Assistance (US$659billion) and Foreign Direct Investment (US$ 306 billion) over the same period. Hence the need to combat illicit financial flows from the continent and stop the outflow of capital which could otherwise be used to finance the provision of public services such as health and education, as well as key infrastructure such as roads, railways, bridges and power plants which are all key to Africa’s industrialisation and overall socio-economic growth and development.
Robust regulatory frameworks are key to curbing IFFs and increasing the resource base for financing the development initiatives and will therefore contribute to reducing IFFs from the continent by promoting the fight against IFFs at policy level nationally, regionally and internationally.
Tax abuse by corporations and high net -worth individuals forces Governments to raise revenue from other sources, including through regressive taxes and this has a disproportionate burden on the poor and most vulnerable sectors of the society. This has important human rights implications because regressive tax structures limit the redistributive impact of social programmes since they effectively end up being funded by the very people they are supposed to benefit. The need to make up revenue shortfalls through regressive taxes thus further undermines the realization of economic and social rights for the most vulnerable.
This has further implications for gender equality. When low income households face deteriorating public services, many women and girls are forced to take on the additional costs of unpaid care needs.