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Network against illicit financial flows launched in Zimbabwe

By Staff Reporter

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Finance Minister has accused foreign business community of sleeping on cash by not using conventional banking methods .Zimbabwe’s ‘funny money’: old and new currency (Photo credit: Sokwanele – Zimbabwe)

A coalition of civil society organizations in Zimbabwe has launched the Zimbabwe Network Against Illicit Financial Flows (ZINAIFF) to improve the legal and institutional governance of national resources for sustainable development, according to a Jonathan Zinyandu representative of African Forum and Network on Debt and Development (AFRODAD).

The launch of the network was announced at recent meeting convened by the Zimbabwe Environmental Organisation (ZELA) on revenue sharing mechanisms in the mining sector.

According to Zinyandu, as per the Centre for Natural Resource Governance, illicit financial flows occur when money is illegally earned, transferred or spent with the intention that the money disappears from any record in the country of origin.

The centre says that if one or more of the following conditions is fulfilled, then such funds are considered to be illicit; if the transfer is illegal, the funds are proceeds of illegal activity and the legal obligations relating to the funds, such as payment of tax have not been observed.

“The issue of illicit financial flows is a new topic gathering momentum and the Centre for Natural Resource Governance, AFRODAD in collaboration with other interested civil society organizations in Zimbabwe have initiated the network to create checks and balances in the financial sector transactions,” Zinyandu said.

He added that it is the first civil society network on such issues in the country and it is going to embark on research to see what is coming in and out of the country. Zinyandu also added that the network has already done research on artisanal mining in Zimbabwe.

Zinyandu highlighted that the network was aware and concerned about some Chinese companies who were going into mining in the country reportedly without obtaining operating licences.

According to Researchers, Ndikumana and Boyce in a 2008 report  Zimbabwe is ranked as  the sixth highest on illicit financial flows from 1970 to 2003. UNCTAD in 2009 also estimated that illicit flows from Zimbabwe were 344% of its GDP in 2004.

The country is also reported to have lost a cumulative $12 billion in the last three decades through illegal financial outflows ranging from secret financial deals, tax avoidance and illegal commercial activities.

He also added that in Zimbabwe illicit financial flows manifested themselves through corruption, tax evasion, transfer mispricing and illegal commercial activities.

Some of the impacts of illicit financial flows affecting Zimbabwe and Africa at large include stifling the continent’s socio-economic progress, distortion of consumption and investment, promotion of corruption and bribery in financial institutions and other sectors of the economy, undermining political institutions including weakening public institutions and domestic private sector development, loss of critical resources meant for development, draining scarce foreign exchange resources, reducing government tax revenues and aggravating foreign debt and increasing Africa’s economic dependency.

Some of the civil society organizations mentioned by Zinyandu involved in the network include AFRODAD, Centre for Natural Resource Governance, Transparency International Zimbabwe (TIZ), ZELA and the Zimbabwe Coalition on Debt and Development (ZIMCODD).

Some of the objectives of the network are to strengthen the evidence base and deepen the understanding of the extent, main drivers and impacts of illicit flows in the country, creating broader and better coordinated Civil Society Organisation (CSO) coalition on illicit flows issues, mainstreaming key demands in CSO advocacy and campaigning on Zimbabwe’s development.

Lobbying and advocating for policy and practice change that will allow more resources to be used in Zimbabwe for development and  poverty eradication.

The centre will also conduct research and advocacy oriented activities meant to identify the quantities, trends and practices in which resources are being illicitly siphoned from Zimbabwe, appraise the impact that illicit flows have on Zimbabwe’s social and economic development, raise awareness on the state of illicit flows and create advocacy programmes that aim at reducing the levels of illicit flows and mechanisms of tracking resources.

-Africa Business

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