The estimated 50 billion U.S. dollars being lost annually by Africa due to illicit financial flows should be a source of concern to the continent, Claver Gatete, Rwanda’s Minister of Finance and Economic Planning said Wednesday.
Opening the third Annual Customer Due Diligence and Corporate Governance Forum organized by the African Export-Import Bank (Afreximbank) in Kigali, Gatete said access to finance and capital was a key constraint to growth and economic development.
Gatete noted that over the last 50 years, Africa had lost in excess of 1.7 trillion U.S. dollars to illicit financial flows, which roughly equaled to all the official development assistance it had received during the same period.
The illicit activities, he said, had significant implications for growth and economic development and for the financial soundness of banks and corporates, adding that they undercut legitimate economic activities, discouraged investment, bred suspicion and undermined government legitimacy.
The minister urged African financial institutions, regulatory bodies and governments to work together to establish mechanisms that would ensure a healthier financial landscape and help prevent financial crimes as well as strengthen investors’ confidence in the continent.
“Financial crimes, compounded by weak corporate governance capacity, have the potential to derail legitimate economic activity and slow down the development of financial markets essential for optimal allocation of capital to support the structural transformation of resource-constrained African economies,” said George Elombi, Afreximbank Executive Vice-President in charge of Corporate Governance and Legal Services.
Afreximbank is preparing to launch an online African Customer Due Diligence Repository Platform to provide a centralized source of primary data required to conduct customer due diligence checks on African counterparties.
That platform would also allow subscribers to conduct due diligences at a low cost, thereby decreasing the cost of trade finance in Africa, according to Elombi.
Afreximbank was also increasing awareness on the need to look inward for financial resources through its Africa Direct Investment Initiative, added Elombi.