Dar Es Salaam - Resource-rich countries should curb illicit financial outflows and set up sovereign wealth funds to manage windfall revenues from hydrocarbon and mineral exports, a senior African Development Bank official said this week.
Development research director Steve Kayizzi-Mugerwa said African countries could finance most of their development needs through their own resources without depending on external debt if they properly managed their wealth.
Nigeria and Angola, among others, have set up funds to manage windfall revenues.
Tanzania, east Africa’s second-largest economy, has made big offshore natural gas discoveries and its government said last year that it planned to set up a sovereign wealth fund to ring-fence future earnings from its hydrocarbon wealth.
“Resource-rich countries should set up well-functioning sovereign wealth funds… that represent self-insurance against capital flight that should favour autonomy in macroeconomic policy,” Kayizzi-Mugerwa said at a financial transparency conference in Dar es Salaam
Activists at the meeting said development was hampered by illicit financial outflows to the West. “A staggering $50 billion (R505bn) in illicit financial flows leaves African countries each year,” said Semkae Kilonzo, the co-ordinator of Policy Forum, a network of over 100 Tanzanian civil society organisations.
Tanzania has become a focal point for financial transparency campaigners following big discoveries of natural gas, uranium and coal.
Zitto Kabwe, the chair of its parliamentary accounts committee, said multinational companies were shifting profits from African countries to tax havens. – Reuters