Tinubu seeks global assistance to tackle illicit financial flows

…Okonjo-Iweala assures Nigeria, others of WTO’s assistance

President Bola Tinubu on Friday solicited the cooperation of the global community to help Nigeria and African countries tackle illicit financial flows which has become a huge burden for the continent.

Tinubu made the plea in Abuja as he declared open the 2024 meeting of the African Caucus – a forum established since 1963 – to address the numerous economic challenges confronting member nations of the International Monetary Fund (IMF) and World Bank Group.

In his address, Tinubu noted that Africa was grappling with numerous challenges across economic, humanitarian and social spheres, and called for global cooperation to enable African countries tackle their shared economic challenges and take advantage of opportunities.

Illicit financial flows in Africa is seen as a deep-rooted challenge, characterised by a complex network of activities including, among others, corruption, tax evasion, money laundering and illegal trade.

Nigeria and other African nations are said to be losing up to $50 billion a year to illegal financial outflows, according to recent reports.

“We need enhanced international tax cooperation to combat illicit financial flows and ensure that multinationals contribute fairly to our economies. We must also foster global economic cooperation to tackle shared challenges and leverage opportunities.

“However, we must also acknowledge the need to take responsibility for our own development by undertaking the difficult structural and fiscal reforms required to boost long-term growth and enable reinvestment into our economies through infrastructure and effective social spending,” Tinubu stated.

Represented at the event by Vice President Kashim Shettima, he described the Caucus Meeting as an opportunity to brainstorm on the major challenges and strategies for fostering inclusive growth and sustainable development in Africa.

The theme of this year’s meeting – the first in Nigeria – is Facilitating Intra-African Trade: Catalyst for Sustainable Economic Growth in Africa,” and reflects the collective commitment of member countries to moving the continent forward economically.

In his address titled, “A Shared Vision for Africa’s Growth,” Tinubu urged African countries to improve the quality of life for people across the continent by ensuring that democracy, good governance, and economic institutions work together.

He regretted that Africa’s story is one of resilience, creativity, and hope, yet, “obstacles such as increasing poverty, debt across many countries, inequality, and conflicts” continue to reduce the chances of meeting the 2030 Agenda for Sustainable Development Goals.

“This is a matter of serious concern,” he stressed, noting bold economic policies being undertaken by his administration to propel Nigeria’s economy out of the downturns created by multiple global shocks.

“Our reform efforts have been strategically focused on fostering fiscal and monetary efficiency, driving sustained long-term economic growth, and catalysing job creation in alignment with the SDGs’ priorities,” he told the meeting attendees.

Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN) said the caucus meeting was timely as Africa stands at a crossroads, with unprecedented opportunities for development alongside significant challenges.

To navigate this complex landscape and set the continent on a path of sustainable economic growth, he said, there was need to leverage the support of global partners like the IMF and World Bank in terms of expertise and resources.

He said the the African Continental Free Trade Area (AfCFTA), the largest global trade agreement provides a new era for the continent, as intra-African trade accounts for just an estimated 13 percent of the continent’s total trade, compared to 60 percent
in Europe and 40 percent in North America.

He said this indicates that significant efforts are needed to build a robust, economically diversified, and prosperous Africa.

According to him, decisions on currency convertibility, cross border transactions, payment systems, cross border movements of our peoples, goods, and services, as well as financial policy, are critical in determining the success of the AFCTA.

Cardoso further emphasised the pivotal role of sound monetary and fiscal policies in facilitating intra-Africa trade and catalyzing sustainable economic growth across the continent.

He then highlighted some of CBN’s recent reforms, which he said, have brought significant outcomes in taming volatility in the foreign exchange market and improving inflows significantly.

“Interbank market activities have deepened while rates have begun to converge around the standing facilities band.” Cardoso noted.

“While challenges remain, the direction of travel is clearly positive. The challenges in the operating environment present significant hurdles. It is crucial that monetary and fiscal policies provide robust responses to mitigate the risks of rising inflation and the lingering effects of adverse supply shocks, which have significantly impacted our economies.”

Speaking virtually, Ngozi Okonjo-Iweala, Director General of the World Trade Organisation (WTO), provided a comprehensive analysis of Africa’s economic situation and potential, and raised deep concerns of impediments to trade on the continent.

She highlighted the enormous untapped gains from the AfCFTA, but quoted UN data for 2021, which showed that only 13% of Africa’s goods trade was internal, compared to 21% for Southeast Asia; 39% for the US, Mexico, and Canada; and 60% for Europe.

She emphasized the need for greater regional integration, and called on countries to leverage enormous green comparative advantage and huge resources.

She noted that the caucus was well positioned to champion macroeconomic reform across the continent and pledged the WTO commitment to assist Africa in any way possible.

In his welcome address, Wale Edun, Minister of Finance and Coordinating Minister of the Economy, who doubles as the Chairperson of the Caucus said, Africa’s economies were improving. He cited available data which suggest that 41 African countries will exceed the 3.2% global growth average in 2024, reaching up to 3.8%, from about 3.4% in 2022 and rising to 4.3% in 2025.