3 days ago
Crooks steal almost R100bn from SA's economy each year
Illicit financial flows are costing South Africa a staggering $3.5 billion annually, nearly 5% of its tax revenue.
Image: RonAI / IOL
Illicit Financial Flows (IFF) – theft – is robbing South Africa of a massive $3.5 billion every year.
That amount translates to almost 5% of the tax revenue that the South African Revenue Service brings in each year, or R92.5bn, according to Deputy Minister of the Department of International Relations and Cooperation, Alvin Botes.
'In 2022 we received roughly $1.1bn (R19.7bn) in official development assistance, but we lose an estimated $3.5bn (R62.7bn) to $5 billion (R89.6bn) each year to tax abuse, trade mis-invoicing, illegal capital transfers and profit-shifting,' said Botes, who was speaking at a conference on illicit financial flows, mobilising domestic resources, and financing for development, hosted at SGN Grant Thornton's offices at the end of last week.
Botes added that 'these losses erode tax bases, shrink fiscal space, weaken institutions and make true sovereignty impossible'. This, he said, means 'children left out of classrooms, hospitals short on medicine, dreams deferred.'
Victor Sekese, SNG Grant Thornton CEO, said that progress is increasingly threatened through IFF, which 'denies our people access to public goods like healthcare, education, infrastructure, and opportunity.'
Quantifying the effect of IFF on socioeconomic development initiatives to improve the lives of all, Botes stated that UN Trade and Development statistics indicate that countries with high illicit flows spend a quarter less on healthcare and more than 50% less on education than their peers.
On a continental level, Sekese said that Africa is estimated to lose over $80 billion annually to these IFF outflows. 'Imagine what we could do with that – build public infrastructure, schools, hospitals and industries,' he said.
Sekese added that it was important not to just have talk shops but to agree on ways to share data, harmonise laws, and hold those who make it possible for IFF to take place accountable. 'Most importantly, to ensure that our recommendations not only inform but shape the final policy proposals presented at the G20 later this year'.
South Africa will host the G20 Johannesburg Summit, the twentieth meeting of the Group of Twenty, on 22 and 23 November. The meeting is set to include heads of state and government, with US President Donald Trump having said the US will attend.
Botes noted that 'the complexity of these crimes also demands deeper inter-agency cooperation, rapid information-sharing and, ultimately, an international legal instrument robust enough to match transnational crime. We therefore call for a United Nations Tax Convention capable of halting Africa's wealth leak and choking multinational tax abuse.'
Let us plug the leaks, mobilise the means and finance the future humanity deserves,' said Botes.
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