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2nd Project Steering Committee of the AU-EU Joint Action to curb Illicit Financial Flows (IFFs) from Africa

The Multi Donor Action (MDA) to curb Illicit Financial Flows from Africa is co-financed by the European Union (EU) with € 5 million, the Ministry for Foreign Affairs of Finland (€3.4 million), and the German Federal Ministry for Economic Cooperation and Development (BMZ) with a € 2 million contribution in the spirit of a Team Europe Initiative. A total €10.4 million have been mobilised to fight Illicit Financial Flows (IFFs) in Africa.

The MDA was launched in December 2020 during the First Extraordinary Meeting of the AU Specialised Technical Committee on Finance, Monetary Affairs, Economic Planning, and Integration and the project is expected to run for a period of three and a half years. The Project Steering Committee for the Joint Action was inaugurated on 14 September 2021 and has the strategic role of providing overall guidance to the project management. The second meeting of the Project Steering Committee was held on 10 May 2022 in a hybrid format at the Headquarters of the African Union in Addis Ababa, Ethiopia.

 On behalf of EU Ambassador to the African Union, Mr. Thomas Huyghebaert, Head of Cooperation to the EU Delegation, at the AU: “This AU-EU Joint Action is of strategic importance for our Africa-EU Partnership and aligns with the commitment made to fight IFFs in Africa during the EU-Africa Summit held in Abidjan in 2017 and remains one of the key political priorities for Africa’s sustainable and inclusive development. We welcome the AUC’s initiative in taking the political leadership on developing crucial strategies on IFF’s and Taxation at continental level.

Ms. Melissa Säilä, Programme Director, Taxation for Development Action Ministry for Foreign Affairs of Finland: “We are happy to participate in this important work as an EU Member State, highlighting the strategic partnership between the African Union and the European Union. Finland’s contribution to the Joint Action is 3,4 Million Euros. The aims of this Action are well aligned with our Government Programme and our Taxation for Development Action Programme. Africa is the geographical focus area of Finland’s development cooperation. We will keep contributing to strengthening taxation capacities as well as promoting tax responsibility and transparency.

The overall objective of the Action is to contribute to reducing IFFs from Africa. First, this will be achieved by strengthening the African Union Commission’s (AUC) facilitating role in fighting IFFs in the region. The project aims to increase AUC’s capacities to coordinate and monitor the progress of regional anti-IFF actions. Second, the Action aims to raise awareness about IFFs among various stakeholders – African Union (AU) Member States, public institutions, and Civil Society Organisations (CSOs). Third, the Action endeavours to improve public institutions’ accountability regarding IFFs. To that end, transparency will be increased on existing anti-IFF measures, and on tax exemptions. The design, adoption and implementation of anti-IFF policies at national and regional levels will also be supported. Last, the Action will contribute to increasing effectiveness of pilot government efforts to tackle IFFs. It will focus on increasing their capacities to fight the phenomenon.

Dr. Thomas Helfen, Head of Division, Coordination of operations with Africa, African Union, Federal Ministry for Economic Cooperation and Development:Germany, Sweden, the Netherlands, France and Finland, have set up a regional Team Europe Initiative (TEI) to support Africa in combating IFFs and Transnational organized crime (TOC), based on a holistic and coordinated approach. Germany is lead coordinator. The TEI builds on existing initiatives to address IFFs and TOC, particularly in conflict-affected and fragile contexts.”

The African Union Commission-Department for Economic Development, Trade, Tourism, Industry, and Minerals (AUC-ETTIM) in collaboration with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) through the Good Financial Governance in Africa Programme, has developed a joint operational plan for 2022 to build the capabilities of the AUC to tackle IFFs in Africa. The 2022 work programme discussed during the Steering Committee outlines key activities and targets that are implemented by GIZ and key PANAFRICAN networks such as: African Tax Administration Forum (ATAF); Collaborative Africa Budget Reform Initiative (CABRI); African Organisation of Public Accounts Committees (AFROPAC); and the African Organisation of Supreme Audit Institutions (AFROSAI) and Tax Justice Network Africa.

Mr. Djamel Ghrib, the Director of Economic Development, Integration, and Trade, delivered the speech on behalf of H.E Ambassador, Albert Muchanga, Commissioner ETTIM: “The Multi-Donor Action to curb IFFs is an important initiative and will play a crucial role in supporting and closing the gaps in Africa’s financing needs for recovery, inclusive growth, sustainable development and building resilient economies.”

In implementing the 2022 operational plans, the Steering Committee concluded from the plans presented by the PAN African networks that a roadmap to create better synergies amongst the partners will be developed to coordinate efforts in tackling Illicit Financial Flows in Africa.

Background

This Multi-Donor Action is jointly co-financed by the European Union (EU) the German Federal Ministry for Economic Cooperation and Development (BMZ) and the Ministry for Foreign Affairs of Finland, Department for Development Policy (Fin), implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH as part of the BMZ project “Good Financial Governance (GFG) in Africa II).

The Action employs a two-fold implementation methodology by strengthening the capacities of the AUC to play a pivotal role in coordinating anti-IFFs policies on the continent, while simultaneously facilitating in-country implementation of pilot measures via the pan-African networks African Tax Administration Forum (ATAF), Collaborative Africa Budget Reform Initiative (CABRI), African Organisation of Public Accounts Committees (AFROPAC) and the African Organisation of Supreme Audit Institutions (AFROSAI). The Action is embedded in wider international initiatives, amongst them the Addis Tax Initiative, the resolution on the Impact of IFFs on Development Finance and the AU Special Declaration on IFFs. Furthermore, the Action contributes positively towards achievements of SDG 16 and 17 and the AU’s Agenda 2063.

Domestic Resource Mobilisation (DRM) is one of the most promising sustainable development financing sources. However, tax-to-GDP ratios in most of African countries have remained extremely low – averaging only 18 percent in 2018. Tax revenue under-collection is largely associated with considerable Illicit Financial Flows (IFFs) in the region. It is estimated that Africa loses about US88.6 billion a year due to this phenomenon. While no unanimous definition of IFFs exists yet, they may be defined using a broad typology consisting of four parameters - namely tax abuse, criminality, abuse of power and market abuse. Illicit refers to activities deemed socially forbidden, even if not legally.

 

 

 

Doreen Apollos, Directorate of Information and Communication | African Union Commission | E-mail: ApollosD@africa-union,org | www.au.int|Addis Ababa | Ethiopia

Biruk Feleke

Press Officer | EU Delegation to the African Union |

E-mail: Biruk.FELEKE@eeas.europa.eu

Otsile Malebaco |GIZ-Good Financial Governance in Africa Public Relations and Communication Officer |+27 76 357 1443 |Email: otsile.malebaco@giz.de

Directorate of Information and Communication | African Union Commission,   E-mail: DIC@african-union.org I Website: www.au.africa I Addis Ababa | Ethiopia Follow Us: Facebook | Twitter | LinkedIn | Instagram | YouTube