UN report names Kenya a prime destination for illicit financial flows

Kenyan 1000 shillings notes. [Photo: CitizenTV]

A recent UN report has ranked Kenya at position 24 in African countries which have a high record of illicit financial flow (IFF).

Interestingly, the situation in Kenya is worse than in Nigeria which was ranked at position 34, Angola (35), Egypt (46), Mauritius (51), Cameroon (53) and South Africa (58).

The United Nations Conference on Trade and Development (UNCTAD) Economic Development in Africa Report 2020 indicated that Kenya said Kenya was ranked second in Africa for accounting for a huge amount of returned stolen assets worth Ksh17 billion by January 2020.

UNCTAD secretary-general Dr Mukhisa Kituyi who presented the report in Nairobi recently said that illicit financial flows continue to deny the government money for development.

“Illicit financial flows strip government treasuries of needed resources for development expenditure. The report’s findings confirm that such financial flows are high in Africa and have been increasing over time,” said Dr Kituyi according to the Standard.

He recommended that Kenya and other African countries relook at their international taxation system to curb illicit financial flows.

“African countries also need to engage much more in the international arena, including in the reforms of the international taxation system, to make it more relevant to the challenges Africa faces in the 21st Century.”

Tax Justice Network Africa has in the past named Kenya as the leading African country when it comes to money laundering and tax evasion. This makes it both a source and a platform for transiting illicit financial flows.

The UN report added that embezzlement, corruption and misappropriation of public funds by government officials abets illicit financial flows (IFF) so does active and passive trading in influence.

“Graft can be an enabler of IFFs by compromising the institutions tasked with anti-money-laundering obligations,” it explains in part.

Acknowledging the challenge, the Kenyan government has proposed the digitization of the tax system as a step to rein in on IFF racketeers.