Illicit financial flows from Africa, including from Namibia, as measured through trade mispricing, show a high concentration in a few sectors, notably the extractive and mining industries.
This is according to deputy finance minister Maureen Hinda-Mbuende.
“Over the period 2000 to 2009, 56% of illicit financial flows from Africa came from the oil, precious metals and minerals, ores, iron, steel and copper sectors,” she said on Wednesday.
She made these remarks during a workshop on illicit financial flows (IFF) measurement and policy formulation for Namibia.
The workshop was hosted by the Bank of Namibia and the United Nations Conference on Trade and Development (UNCTAD).
It was aimed at building the capacity of the national Technical Working Group (TWG) and key government and non-state actors on the measurement of IFFs and their policy linkages.
Participants included statisticians, economists, policymakers, development experts and trade experts, who are members of the national TWG on IFFs.
Bojan Nastav, a UNCTAD statistician, highlighted the fishing and mining sectors as the most-affected by IFF, citing trade mis-invoicing and profit-shifting practices.Last year, Namibia Revenue Agency (NamRA) commissioner Sam Shivute expressed disappointment with how little the fishing sector is contributing to the country’s total revenue.
“The fishing sector is only contributing less than 2% to the total revenue. You have fish being exported from the country on a weekly basis to lucrative markets like Spain and Italy. Also, 12% of fish consumed in Africa come from Namibia. That’s regardless of it being considered as one of the top five export sectors for Namibia,” he said at the time.
The concerned tax commissioner added that looking at the sector’s contribution, “it’s not even a billion Namibia dollars; it cannot be. We need to pay special attention to this sector”.
Hinda-Mbuende’s revelation on the mining sector may not align with Namibia’s economy, as it is a dominant contributor to gross domestic product (GDP).
Specifically, the mining industry’s contribution to GDP increased to 14.4% in 2023 from 9% in 2021, and 11.9 % in 2022.
Once again, Namibia’s mining industry achieved remarkable growth in 2023 at some 18.9%.
In 2023, Namibia achieved record gold and uranium production, reaching 9 800 kilogrammes and 8283 tonnes, respectively. This represented an annual growth of 31% for gold production, and 24.5% for total uranium production.
“The concept of IFF is multi-dimensional and transnational in character, as it crosses borders and continues to diminish the income of the needy, while weaponising the growing wealth of the biased riches. Therefore, it should have no space in any economy that seeks to develop sustainably and contribute meaningfully to the socio-economic well-being of a nation,” she said.
She further stated that Namibia trades with over 230 countries and territories globally.
In this regard, the scourge of illicit financial activities is equally intertwined and complex. Thus, it requires a multi-dimensional approach, as it also poses a significant threat to the socio-economic fabric of nations around the world.
Indeed, the United Nations has declared that illicit financial flows are a handicap to development financing, hence a hindrance to sustainable development goals.
Hinda-Mbeunde applauded the work being done, deeming the workshop necessary to provide a sound mechanism for measuring the problem of IFF.
She said the intelligence gathered will help strengthen the policy formulation process to enable Namibia to reduce and curb the estimated N$33 billion potential tax-related offences, as estimated by the Financial Intelligence Centre in the National Money- Laundering, Terrorist and Proliferation Financing Risk Assessment Report of 2021.
-mndjavera@nepc.com.na