Online Reporter
Judith Phiri
Zimpapers Business Hub
EXPERTS have called for adaptive strategies to combat illicit financial flows (IFF) in Zimbabwe, amid fears the country may be losing about US$6,15 billion (2020–2025) at a time when the country faces serious financial resource constraints.
IFFs are movements of money and assets across borders that are illegal in 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 on the 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 was a need to come up with an “A” game to curtail the problem.
“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, pinpoint the specific points where illicit transactions occur.
“Incentivise compliance, this makes legitimate investment the most profitable choice and automate controls by implementing technology to remove human discretion as well as securing transactions to ensure funds are verified and taxes remitted automatically,” he said.
He said his proposal for a National Digital Escrow System for all major mineral exports targets the transaction point with technology.
Mr Dhlamini said there was a need for secure payment with foreign buyers paying into this secure platform, as well as automated verification with the platform, using artificial intelligence (AI) and real-time data, which verifies the price against global benchmarks.
He added: “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 there was a need for the Government and policymakers to reform laws like the Mines and Minerals Act to embed transparency and accountability, as mining was one of the sectors affected by IFFs.
She said: “There is a need to also 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, while mandating beneficial ownership disclosure to expose hidden interests and prevent shell company abuse is important.
Bulawayo Progressive Residents Association (BPRA) executive director Ms Permanent Ngoma said combating IFFs was essential to restore infrastructure, improve service delivery and protect Zimbabweans’ welfare.
“Combating IFFs in Zimbabwe is essential because it strengthens a nation’s ability to fund essential services like infrastructure, improve healthcare and education and provide social protection for vulnerable citizens.
“By reducing IFFs, more resources are 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.
