Online Reporter
Judith Phiri, Zimpapers Business Hub
ZIMBABWE is losing an estimated US$6,15 billion to illicit financial flows (IFFs) between 2020 and 2025, according to experts who are calling for new strategies to combat the problem. The figure highlights the serious financial constraints facing the country.
IFFs refer to the movement of money and assets across borders that are illegal in their source, transfer, or use.
According to the United Nations Conference on Trade and Development (UNCTAD)’s Economic Development in Africa Report 2020, an estimated US$88.6 billion — equivalent to 3,7 percent of Africa’s gross domestic product (GDP) — leaves the continent through illicit capital flight.
Speaking during an online webinar titled Implications of Illicit Financial Flows on Zimbabwe’s Development: Actors, Enablers, Beneficiaries and Policy Interventions, economist and National University of Science and Technology (Nust) lecturer Mr Stevenson Dhlamini said there is a need to develop a robust strategy to address the issue.
“We face highly rational players who adapt to new rules. Our solutions must be equally sophisticated re-engineering the game to make Path B an irrational choice. Identify vulnerabilities and pinpoint the specific points where illicit transactions occur.
“Incentivise compliance to make legitimate investment the most profitable choice, and automate controls by implementing technology to remove human discretion. Secure transactions to ensure funds are verified and taxes remitted automatically,” he said.
Mr Dhlamini proposed a National Digital Escrow System for all major mineral exports, targeting the transaction point with technology.
He said there is a need for secure payment systems, with foreign buyers paying into a secure platform, and automated verification using artificial intelligence (AI) and real-time data to compare prices against global benchmarks.
“There is a need for direct remittance, which automatically calculates and remits required taxes and royalties directly to the Treasury. With net release, only then is the net balance released to the seller. This shifts us from ‘trust and verify’ to ‘distrust and automate,’ surgically removing human discretion and information asymmetry at the most vulnerable point.”
Zimbabwe Accountability and Citizen Engagement (Zimace) project lead at the Zimbabwe Environmental Law Organisation (ZELO), Ms Fadzai Midzi, said the Government and policymakers must reform outdated laws such as the Mines and Minerals Act to embed transparency and accountability, as mining is one of the sectors most affected by IFFs.
“There is also a need to enforce anti-money laundering regulations and strengthen oversight institutions. The country can join the Extractive Industries Transparency Initiative (EITI) to align with global best practices. Mandating beneficial ownership disclosure to expose hidden interests and prevent shell company abuse is also important.”
Ms Midzi said that civil society and watchdog groups can amplify citizen voices demanding fair and transparent resource governance, and conduct evidence-based research.
Bulawayo Progressive Residents Association (BPRA) executive director Ms Permanent Ngoma said combating IFFs is essential to restoring infrastructure, improving service delivery, and protecting the welfare of Zimbabweans.
“Combating IFFs in Zimbabwe is essential because it strengthens a nation’s ability to fund essential services such as infrastructure, healthcare, and education, and to provide social protection for vulnerable citizens.
“By reducing IFFs, more resources become available for national development, allowing for better governance, increased fiscal space, and the protection of citizens’ welfare and public trust,” she said.
The webinar was hosted by the Public Policy and Research Institute of Zimbabwe (PPRIZ) through its Strengthening Policy Engagement through Evidence and Dialogue (SPEED) project.
