Illicit financial flows: The hidden crisis in Tanzania’s development
MCL Editor, Ephrahim Bahemu, discuses the effects of illicit financial flows on Tanzania’s development in a panel discussion last weekend in Dar es Salaam. With him are MCL journalists Elias Msuya (centre), Josephine Christopher (second right) and discussants from other organisations. PHOTO | THE CITIZEN CORRESPONDENT
What you need to know:
- Back then, the report estimated that Africa was losing $50 billion annually due to IFFs. Today, that figure has skyrocketed to $88 billion.
Dar es Salaam. In a world where Africa’s development is often overshadowed by dependency on foreign aid and loans, a troubling trend is emerging: illicit financial flows (IFFs).
Defined as the illegal movement of funds or resources out of Africa, IFFs are not just a financial concern; they are a significant barrier to achieving the continent’s Sustainable Development Goals (SDGs).
The revelation came to light last weekend during a breakfast debate organised by Policy Forum dubbed Expose the flow: The role of journalism in combating illicit financial flows in Tanzania.
The event focused on highlighting the importance of capacity building for journalists to track, expose and curb IFF incidents.
This came after several Tanzanian journalists received the training under the collaboration of the UK- and US-based Thomson Reuters Foundation (TRF) and Policy Forum (PF).
Speaking during the event, a Policy Forum official, Mr Samwely Mkwatwa, underscored the urgency of addressing the vice, which he described as a silent crisis crippling African nations.
Mr Mkwatwa said in 2011, African finance and development ministers gathered under the African Union (AU) to discuss how the continent could meet its SDGs.
He said they realised that the goals would remain unattainable, which led to the formation of a commission, chaired by former South African President Thabo Mbeki.
According to him, the commission’s 2015 report revealed a staggering truth: Africa loses more money through IFFs than it receives in aid and loans.
Back then, the report estimated that Africa was losing $50 billion annually due to IFFs. Today, that figure has skyrocketed to $88 billion.
“This alarming increase highlights the ongoing struggle for African nations to harness their own resources for development,” he said.
A senior journalist from Mwananchi Communications Limited (MCL), Mr Elias Msuya, said for Tanzania, the consequences of IFFs are felt most acutely in resource-rich areas like Tarime, Shinyanga, Kahama, Geita, and Bulyankulu.
He highlighted the disparity between the wealth generated in these areas and the living conditions of their inhabitants.
“Do the lives of citizens in these mineral-rich areas reflect the wealth beneath their feet?” he questioned.
“Worse still, law enforcement often harasses those trying to scrape a living from mining sands,” he added. He blamed the country’s tax regime for complicating matters further, as all revenue collected is funnelled into a consolidated fund before being redistributed for development projects.
Despite attempts to reform the existing laws during the presidency of the late John Magufuli, the country has struggled to implement laws that prioritise local benefits.
“When Magufuli tried to reform these laws, but the law reviews led to serious tensions with investors resulting in a demand for scrapping the statutes,” noted Mr Msuya.
This legal backdrop means that Tanzania continues to rely heavily on foreign loans for infrastructure projects, like the ongoing rehabilitation of Dar es Salaam City, despite the nation’s rich natural resources.
In this context, the media plays a critical role in raising awareness and pushing for accountability.
During the training, journalists learnt about the intricacies of IFFs and the importance of investigative reporting.
Mr Msuya emphasised that journalists should strive for accuracy, utilise data from credible sources, and balance their narratives.
“Building relationships with sources is key,” he advised. “Journalists should inform their sources that their work aims to enhance policy and regulation changes.”
MCL Economist and Business editor, Mr Ephrahim Bahemu, highlighted the direct impact of IFFs on ordinary citizens.
“The $88 billion lost annually equates to about Sh200 trillion—a staggering sum compared to the combined budgets of East African countries like Tanzania, Kenya, and Uganda,” he stated.
This lost revenue could have funded essential development projects and improved social services, thus reducing the continent’s reliance on external aid, said Mr Bahemu.
He pointed out that Tanzania plans to finance 30 percent of its 2024/25 budget through foreign aid and loans, perpetuating a cycle of dependency.
A call for collaborative journalism
To combat the issue of IFFs, journalists were urged to collaborate across borders, as the flows often involve multiple countries.
Speaking during the event, MCL’s business reporter, Josephine Christopher, stressed the need for journalists to enhance their data analysis skills.
“IFFs are often cross-border issues; thus, collaboration with journalists in neighbouring countries is crucial for effective tracking and reporting,” she said.
Ms Christopher said the implications of IFFs extend beyond economics as they intersect with national security, warning that IFFs are often linked to other illegal activities, such as drug and human trafficking.
“These activities can fuel international crimes and pose serious threats to our citizens’ safety,” she cautioned.
A freelance journalist and coordinator at Code for Africa, Ms Zahara Tunda, said advocating for policy changes is another vital role for journalists, emphasising the media’s potential to drive the IFF agenda.
“Journalists should be equipped to cover stories related to IFFs effectively,” she said.
Ms Tunda also advocated for systemic reforms that prioritise patriotic governance: “When patriotism is missing at the top leadership level, the consequences trickle down to the grassroots.”
Participants who attended the event expressed their frustrations regarding the prevalence of IFFs and their impact on development.
A Dar es Salaam resident, Mr Datus Pastory, called for consistent reporting on issues like the performance of investments and the implementation of development projects.
“Investigative journalism should not be a one-off event; it requires sustained attention,” he said.
Others pointed out that multinationals often create conflicts of interest in reporting on IFFs, highlighting the challenges faced by journalists in a landscape dominated by powerful advertisers.
As discussions around IFFs gain traction, the collective call for action resonates across various sectors, with Mr Makwatwa calling for transparency and accountability throughout the community.
“Those behind IFFs should be exposed, no matter the threats,” he declared.
During the event, the need for robust investigative journalism was clear, and it was crucial not only for uncovering financial misconduct but also for advocating for the rights of ordinary Tanzanians.
The future of Tanzania’s economic independence may very well depend on the ability of its journalists to shine a light on these illicit flows and hold those responsible accountable.
This is because IFFs represent a significant challenge to Tanzania’s development, with the continent’s $88 billion annual loss putting many countries including Tanzania at a crossroads.
The responsibility lies not only with policymakers but also with the media and civil society organisations to address these hidden crises.
By fostering a culture of investigative reporting, collaboration, and advocacy, Tanzania can begin to reclaim its resources and pave the way for sustainable development, ultimately improving the lives of its citizens.
