Analysis

The Analysis Section of Afronomicslaw.org publishes two types of content on issues of international economic law and public international law, and related subject matter, relating to Africa and the Global South. First, individual blog submissions which readers are encouraged to submit for consideration. Second, feature symposia, on discrete themes and book reviews that fall within the scope of the subject matter focus of Afronomicslaw.org. 

A New Dawn for Fintech in Africa: Consideration for the Fintech Annex of the Protocol on Digital Trade

The inclusion of Fintech in the Protocol on Digital Trade and the requirement to develop the Fintech Annex represent a significant milestone for Fintech on the continent. Documents like the Fintech Annex take time to develop and are not revised as frequently as domestic frameworks. Therefore, it is crucial that stakeholders involved in negotiating the Fintech Annex strive to produce a document that will stand the test of time and facilitate measurable results. This piece has attempted to highlight some key considerations for developing the Fintech Annex. However, what has been covered is merely the tip of the iceberg. There are many other issues to consider. Experts and scholars in the field of Fintech are encouraged to urgently publish on this topic to support the efforts of the actual negotiators of the Fintech Annex.

Essentials of Trade Policy in Africa – The Repertoire

In the pecking order of cabinet ministries, Trade and Industry tends to come close to the bottom. What is more, is that Trade and Industry Ministries typically get allocations of less than 1 percent of national budgets. No wonder, then, that ecosystems don’t exist that would facilitate production and trade of high-value, transformative products with high impact in the broader economy. Yet, the rhetoric about export-led development is ceaseless. This is certainly the case in practically all African countries.

Symposium on IFFs: Third World Approach to Economic Globalisation and Digitalisation of the Economy: Assessing Current Initiatives for Combating Tax and Commercially Related Illicit Financial Flows from Africa

Globalisation and digitalisation of the economy has radicalised tax administration and commerce in Africa. While there is still significant room for growth, there has been a paradigm shift in Africa’s development policy landscape over the past three decades. Economic liberalisation measures aimed at opening up the continent to global market forces and attracting foreign direct investment have significantly replaced state intervention and public ownership in most African countries.1 There is a race amongst governments in the continent to optimise and harness the vast tax potential of both the digital economy and the emerging digital finance market involving trading in cryptocurrencies, Non-Fungible Tokens (“NFTs”), and other digital assets. They aim to embrace the regulatory complexities of both the digital economy and the emerging digital finance market with a view to making their countries fit for the digital age and to building a future-ready economy that works for the advancement of their people. However, the rise of globalisation and digitalisation of the economy, including the economic liberalisation that followed, has (amongst other factors) allowed tax and commercially related Illicit Financial Flows (“IFFs”) to thrive in Africa. IFFs from Africa are said to have assumed crisis proportions in recent times.3 Global Financial Integrity (2010) reportedly estimates IFFs from Africa between 1970 and 2008 alone at more than U$1 trillion, an amount that dwarfs the combined inflows of developmental assistance and foreign direct investments into the continent over the same period.4 Nigeria is also reported to have led other resource-rich African economies with this enormous outflow, put at US$217.7 billion, or 30.5% of the total IFFs from Africa within the relevant period.5 Africa is currently estimated to be losing more than US$50 billion to US$86.63 billion annually in IFFs.6

Symposium on IFFs: Grey-Listing, Global Anti-Money Laundering Regulation and the Classic Divide

South Africa was recently put on the Financial Action Task Force’s grey-list. The Financial Action Task Force (FATF) – an authoritative quasi-regulatory global body - relegates countries to ‘grey-list’ status when they fail to live up to global anti-money laundering, anti-terrorism, and anti-proliferation financing standards. Following an evaluation and extensive engagements with the African country, the FATF decided that a series of 8 strategic deficiencies needed to be addressed by South Africa before the end of 2025. It therefore placed South Africa under ‘increased monitoring’, a listing informally known as grey-listing. The FATF was created in 1989 to oversee the development and implementation of global anti-money laundering law. Through a series of developments – including the September 11, 2001 terrorism strikes in the United States – the FAFT’s mandate expanded to capture terrorist finance and proliferation financing. Drawn from the content of a series of international instruments attentive to the relationship between money and crime, the FATF compiled a set of 40 recommendations known as the global anti-money laundering, anti-terrorist finance, and anti-proliferation financing standards. The recommendations comprise matters such as specific money-laundering offences and confiscation regimes as well as measures designed to promote financial transparency (for instance, financial reporting requirements and beneficial ownership registries) and to facilitate international cooperation.

Symposium on IFFs: Illicit Financial Flows & FACTI Recommendations: Reforming International Asset Recovery Mechanism

The International Asset Recovery Mechanism as it currently operates is highly unfair and disadvantageous to developing African countries. It is a system frost with power game, colonial vestige, and the undermining of the African sustainable development agenda. Indeed, African countries persistently suffer from the detrimental impact of outward illicit financial flows (IFFs), stemming from complex and multifaceted criminal and commercial activities. Latest IFFs estimates from the United Nations Conference on Trade and Development Organization for Economic Cooperation and Development and African Development Bank (AfDB) reveal an ugly illicit financial flight that continues to deprive the continent of huge domestic resources and economic prosperity.

Symposium on IFFs: An International Anti-Corruption Court: A Win Against IFFs, A Win for Africa

The relationship between IFFs and corrupt conduct of various stripes is, perhaps, intuitive. Bribery and embezzlement; money laundering; concealment of taxable business profits; even obstruction of justice around enforcement. All of these are tools in the apron of those who would facilitate and profit from IFFs, whether their misappropriated millions are enjoyed at home or, as is increasingly the case, sheltered and laundered abroad. It has been estimated that the amount of money lost to developing states via IFFs outstrips the amount received in foreign aid by a factor of ten. As the United Nations Office on Drugs and Crime tells us, corruption is particularly corrosive because it undermines the proper functioning of governmental entities and institutions, discourages foreign direct investment and perverts the rule of law.

Symposium on IFFs: Securing the Bag - Towards Realising Just Energy Transition: A Developing Country’s Perspective

In recent times, developing countries are faced with a challenging task of balancing their commitment under various international instruments such as the Paris Agreement to achieve a Just Energy Transition and their pertinent need for industr1ialization and development. At the center of this contention is the knowledge that resources are scarce and must be allocated judiciously towards desired goals. The existing scarce resources are further plundered through illicit financial flows because of ineffective systems in developing countries. This paper examines the idea of a Just Transition through the lens of developing countries like African countries whose contribution to global greenhouse gas emissions have been minimal. The paper highlights access to finance as a key component of an expedient Just Transition and highlights illicit financial flow as a threat to the realization of the Just Energy Transition among other pre-existing structural challenges. This paper calls on developing countries to tighten their ship in retaining capital and limiting the illicit exportation capital towards realizing the Just Energy Transition.

Symposium on IFFs: Virtual Heists: Illicit Financial Flows Amidst Digitalisation and Economic Liberalisation in Africa

Over the past few decades, we have seen an emerging form of neoliberal discourses on Africa that focus on emergence, as the continent has moved from being framed as the world’s “problem case” to the exciting new frontier of “Africa Rising". This has pushed neoliberal capitalists to see Africa as a continent of the future that is about to achieve transformations and socio-economic progress if it follows the orthodox advice of opening its market and accepting negative integration into the world economy. However, fuelled heavily by GDP growth rates, the “rising” narrative has been adept at obscuring a reality of widening wealth inequality and persistent poverty among the majority sections of the continent’s population even while witnessing the emergence of mega shopping malls and cell phones in almost every hand. Additionally, the myth of an Africa that achieves growth has overshadowed the quality of this growth as it does not lead to an improvement in the living conditions of Africans but instead breeds illicit financial flows (IFFs).

Symposium on IFFs: Strengthening the Financial Integrity of the Climate Transition by Curbing Illicit Financial Flows

Climate finance is critical in addressing climate change because of the large-scale investments required for the climate transition. Climate finance refers to local, national or transnational financing – drawn from public, private and alternative sources of financing that seek to support mitigation and adaptation actions that will address climate change. The United Nations Framework Convention on Climate Change, the Kyoto Protocol and the Paris Agreement call for financial assistance from Parties with more financial resources to those that are less endowed and more vulnerable to the adverse effects of climate change. Despite the gathering momentum when it comes to climate finance, developed nations have so far failed to meet their long-standing climate pledges. Developed countries fall significantly short of their commitment to contribute $100 billion annually to support climate actions in developing nations. There remains a substantial financial gap in climate finance in Africa, yet climate disasters cost between 5 and 15% of the Gross Domestic Product (GDP) each year. According to the United Nations Economic Commission for Africa (ECA), the implementation of African Nationally Determined Contributions (NDCs) requires nearly $3 trillion, including about $2.5 trillion between 2020 and 2030. The need to fast-track climate finance is urgent and undeniable. However, Parties should also take into account the question of financial integrity in the climate transition. Transparency International defines financial integrity as “a financial system that operates in a clean, transparent and accountable way”. Tax transparency, fiscal transparency, procurement and contract transparency, and beneficial ownership transparency are prerequisites to financial integrity.

Symposium on IFFs: A Call to Action - Illicit Financial Flows and Migrants’ Right to Development

This essay proposes an alternative to the contemporary theorization of the relationship between Illicit Financial Flows (IFFs) and Migrant Rights. Contemporary theorization of the relationship between IFFs and Migrant Rights solidified a linear correlation between human trafficking or smuggling and IFFs. It is common among existent literature to state that human trafficking and smuggling are some of the contributors to IFFs out of Africa. For instance, the High-Level Panel on IFFs from Africa noted that IFFs “typically originate from three sources: commercial tax evasion, trade mis-invoicing, and abusive transfer pricing; criminal activities, including the drug trade, human trafficking, illegal arms dealing and smuggling of contraband; and bribery and theft by corrupt government officials." Further notable is that analysis of the impact of IFFs on development usually tends to marginalize migrant (“a person outside of a State of which they are a citizen or national, or in the case of a stateless person or person of undetermined nationality, their State of birth or habitual residence”) communities in its theorization or empiricism. That is partly because contemporary development studies fail to recognize the relationship between IFFs and migrants’ right to development. Therefore, this essay is an early-stage critical theorization and a call to action for scholars to theorize the relationship between IFFs and migrant rights to development.