Corruption, Illicit financial outflows affecting development in Zim
Corruption and Illicit financial outflows are among key factors that are working against development and domestic resource mobilisation in Zimbabwe, according to the Zimbabwe Coalition on Debt and Development (ZIMCODD).
Of late, cases of high level corruption and gold smuggling have been on the increase in Zimbabwe.
The cartels are mostly linked to government officials and other powerful politicians.
Below, we publish a statement by ZIMCODD that outlines how corruption and illicit financial outflows are disenabling effective domestic resource mobilisation in Zimbabwe.
ZIMBABWE SHOULD LIFT ITSELF OUT OF POVERTY WITH GOOD ECONOMIC GOVERNANCE
The case that Zimbabwe has adequate resources to finance its own development has persisted with various arguments presented.
One side of the argument which this edition of the weekend reader is considering is that Corruption and Illicit financial outflows are the key factors that are disenabling effective Domestic Resource Mobilisation in the country.
On the 9th of May 2021, social media was awash with news of a man who was suspected to be coming from Zimbabwe who was arrested at OR Tambo airport with 23 pieces of gold worth R 11 000 000. Using the 1 ZAR = 0.0711255 USD or the 1 US$ = 14.0597 exchange rate, the value of the gold is US$ 782, 380.37.
This points to excessive revenue leakages and poor public resource management especially following another incident where Henrietta Rushwaya in October 2020 was caught at the Robert Gabriel Mugabe International Airport whilst trying to smuggle 6kg of gold to Dubai.
The Rushwaya’s case involved an estimate of US$333 000 worth of gold.
Illicit financial flows in Africa and Zimbabwe continue to erode potential revenue that can lift the continent and the country out of the economic situation that it finds itself in.
Economic Development in Africa Report of 2020 notes that Africa losses approximately US$ 89 billion to illicit financial flows per year which is equivalent to 3.7 per cent of the continent’s gross domestic product.
This figure has steeply gone up from at least $50 billion annually which was reported in the High-Level Panel on illicit financial flows from Africa Report led by the Mbeki Commission in 2011.
An adverse irony is that Africa is losing more through illicit financial flows than what it receives annually as Official Development Assistance.
Evidence in the case of Zimbabwe shows that the illicit financial flows are fuelled through State capture and rent-seeking. Zimbabwe has lost approximately US$ 32.179 billion to illicit financial flows in the last two decades and approximately US$ 1.5 billion in gold smuggling in 2020 against US$ 800 million official Fidelity exports.
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