ASAUK 2018

Global inequality and fiscal insecurity have reached alarming levels and is still deepening each year. In 2017 it was found that only 61 people owned the same wealth as half the world and 42 people have been found to own the same wealth as the bottom 50% of the world in 2018. ^[1] 10 of the 19 most unequal countries in the world are from Southern Africa and Central Africa. These countries have large oil and mining sectors.^[2] The consequences of inequality on society are expanding to all spheres of life from security and stability to education, food, shelter, health and sanitation.

In Sub Saharan Africa, UNDP concluded that inequality is a “by-product of regressive taxes, unresponsive wage structures and inadequate investment in education, health and social protection for vulnerable and marginalized groups.”^[3] At the global level, UNCTAD found that the origins of inequality lay embedded in the deregulation of markets – particularly financial and currency markets – in rich and poor countries alike. In addition, idolising profit making in all spheres not only economic but also social, cultural and political realms and withdrawal of public oversight and management of the economy have had the combined effect of creating a hyperglobalised world.^[4]

Hyperglobalisation has led to a concentration of economic power and wealth in the hands of a small group of people and companies. Consequently, political representation has been corrupted by economic power and people simply do not trust those who claim to represent them. This is a consequence of systemic forces that are channelling economic power into political power and in the process reinforcing economic power.[5] To protect the gains made to democracy this vicious cycle needs to be addressed.

Ogle has concluded that low or nil tax regimes, light regulation and limited government oversight of corporate activity was the product of:

“…concrete, conscious, and deliberate government decisions and support, most typically pushed by lawyers, accountants, former diplomats and politicians who were now engaged in business, and former spies and people with ties to intelligence services acting at the behest of business groups as well as in their own interest. It was a regular and integral rather than exceptional element of twentieth-century liberal-democratic capitalism.”^[6]

Illicit financial flows are a consequence of long-standing historical roots. It has given rise to inordinate levels of inequality among and within states. The system was built-up and maintained by states, as both political entities and as market actors^[7], on the one hand, and non-state actors on the other. States and non-state actors will consequently both have a significant role in unravelling and transforming the system.

Even though illicit financial flows, tax evasion and tax avoidance take place through the use of intricate business processes and methods, it took concrete, deliberate and conscious action by states and business to create the system and it can also be unravelled with concrete, deliberate and conscious action by the state – compelled under the principles of international human rights law or with political will generated through political engagement and mass mobilisation.

This paper will propose the adoption of a human rights based approach to illicit financial flows, globally but more particularly within the African regional human rights system.

A human rights based approach “is normatively based on international human rights standards and operationally directed to promoting and protecting human rights. It seeks to analyse inequalities which lie at the heart of development problems and redress discriminatory practices and unjust distributions of power that impede development progress”^[8]. A rights based approach is one which is firmly rooted within the context of duty bearers who have obligations in human rights law and rights holders who are entitled to claim their rights and consequently hold duty bearers to account.^[9]

This analysis will provide rights holders with the norms and standards necessary to hold duty bearers to account for facilitating, failing to curtail and developing and maintaining systems which facilitate illicit financial flows from Africa.