Illicit Financial Flows, Corruption May Hinder AfCFTA—Afreximbank

By Adedapo Adesanya

The African Export and Import Bank (Afreximbank) has advised that for the African Continental Free Trade Agreement (AfCFTA) to become a success, the continent must check corruption and illicit financial flows.

President of the bank, Mr Benedict Oramah, gave this advice at the virtual 2020 Africa Business Ethics Conference with the theme Tackling Corruption to Reduce Poverty and Unemployment in Africa: A Necessity for Building Resilience to Global Risks, which was organised by the Lagos Chamber of Commerce and Industry (LCCI) in partnership with the Centre for International Private Enterprise (CIPE).

Mr Oramah, who was represented by the Director of Compliance at Afreximbank, Mr Idris Diop, stated that, “In the continental free trade areas, Africa is arming itself with a tool for future prosperity.

“However, the success of the AfCFTA is obviously partly dependent on the continent’s ability to combat corruption and illicit capital flow to ensure the availability of resources and infrastructure.”

He cited that in its 2020 report on economic development in Africa, the United Nations Conference on Trade and Development (UNCTD) explained that stopping illicit capital flight will almost cut by half the annual financing gap of $200 billion that the African continent faces as it strives to attain the Sustainability Development Goals.

He noted, “It is estimated that every year, 3.7 per cent of Africa’s GDP leaves the continent as illicit capital flow. Most of these illicit flows stem from the proceeds of corruption.

“Between 2000 and 2015 the total illicit capital flight from Africa amounted to $836 billion compared to Africa’s total external debts stock of $707 billion in 2015.

“A one-point increase in corruption decreases the growth rate of the GDP between 0.75 per cent and 0.9 per cent per year. And per capita income growth rate between 0.39 and 0.41 per cent respectively.”

For her part, President of the LCCI, Mrs Toki Mabogunje, noted that the conference was meant to promote conversations that would provide solutions in addressing corruption as a strategic approach in reducing the high incidence of poverty and unemployment across Africa.

Mrs Mabogunje explained that corruption, which is one of the biggest developmental challenges facing African economies, was quite enormous for the continent.