The Universal Declaration of Human Rights turned 70 on December 10. Governments and civil society organizations around the world commemorated the day with a range of activities.
Over the years, the Declaration has been a global beacon for Africans fighting against colonialism and for inclusive economic equality and sustainable development. Its provisions stand as aspirational goals for nations, and standards that nations are duty-bound to uphold and promote.
But what if despite your country’s commitment to uphold these and other fundamental freedoms, every year it was robbed of the financial resources necessary to promote and protect rights?
This is the case for most nations in Africa, where illicit financial flows (IFFs) rob countries of $60-100 billion dollars each year — losses in many countries that exceed foreign direct investments and development assistance. Funds that could be used to secure basic economic and social rights — for example the rights to social security, decent work, and human dignity — are instead held in secret tax havens for the benefit of corporate elites.
In 2015, the African Union’s Economic Commission on Africa released Illicit Financial Flows: Report of the High-Level Panel on Illicit Financial Flows from Africa. The report — generally known as the Mbeki Report after the panel’s chair, former South African President Thabo Mbeki — defines IFFs as “money illegally earned, transferred, or used,” a definition that includes money laundering, tax abuse, and market and regulatory abuse, along with practices that “go against established rules and norms, including legal obligations to pay tax.”
Some 30 percent of IFFs are attributed to criminal activities, and 5 percent to corruption. The panel determined that 65 percent is attributed to commercial or business activity. The most prevalent method of commercial theft is the practice of trade misinvoicing, where companies report export values to the developing country that are far below their actual worth, which results in a reduction in corporate income taxes, customs duties, and value added taxes (VAT).
Nigeria, Africa’s most populous nation and its largest economy, lost $2.2 billion this way in 2014, which according to Global Financial Integrity (GFI), a Washington, D.C.-based think tank, was equal to 4 percent of total government revenue.