Namibia, like most African countries, faces resource-linked illicit financial flows (IFFs) in mining and fishing, the UN Trade and Development (UNCTAD) says.
The vulnerability primarily stems from authorities’ insufficient expertise and skills to effectively close loopholes.
“In Namibia, we have observed this phenomenon through previous work, particularly in the trade of mining and fishing. Trade misinvoicing and profit-shifting practices have been the primary focus in these sectors,” Bojan Nastav, a Statistician at UNCTAD told The Brief at the Bank of Namibia and the United Nations National Workshop and Training on the measurement of IFFs in Namibia.
The workshop and training are aimed at building the capacity of the National Technical Working Group (TWG) and key government and non-state actors on the measurement of IFFs and its policy linkages.
The participants include statisticians, economists, policymakers, development experts and trade experts who are members of the national TWG on IFFs.
At the opening, Deputy Minister of Finance and Public Enterprises Maureen Hinda-Mbuende highlighted the significant impact of IFFs on Namibia and the broader African continent.
She said with statistics revealing that 56% of Africa’s illicit financial flows originate from sectors such as oil, precious metals, and minerals, the gravity of the situation cannot be overstated.
As Namibia’s economic landscape has also been profoundly affected by these illicit practices, Hinda-Mbuende highlighted the country’s trade imbalances, with an import bill of N$361 billion and an export bill of N$267 billion over the past three years.
She said these figures underscore the urgent need for fair trading practices and enhanced oversight.
“How much of such excessive value of trading was conducted under fair market practices, on the correct and accurate invoice, with appropriate tax charges and with the assurance that fees were not transferred to any international tax haven accounts which enhance the inner working of the secret economy that benefits only the rich, the powerful and the criminally minded,” she said.
The Deputy Minister emphasised the importance of international cooperation in combating IFFs, stating that no country can effectively address this issue alone.
She called for concerted efforts to build fair and resilient societies that prioritise human dignity and justice.
She emphasised the need to expose hidden resources and retain illicit flows within Africa to boost domestic revenue and fund government budgets.
“Illicit financial flows need to be retained on the continent so that the resources are instead invested to increase the respective national governments’ revenue pools, saved or consumed. Indeed, such flows could also be appropriately levied or taxed to provide additional revenue to fund government budgets, which are often in deficit; it stands to boost domestic resource mobilisation efforts,” she said.
This comes as Namibia has launched the Trade Verification System, a digital platform designed to significantly reduce the N$33 billion potential loss in tax revenue due to fraudulent activities, as estimated by the Financial Intelligence Centre.
The implementation of the system is expected to eradicate the risks outlined in the FIC National Money Laundering, Terrorist, and Proliferation Financing Risk Assessment Report of 2021.
The system, a collaborative effort between the Bank of Namibia and the Namibia Revenue Agency, was launched as an innovative step to drive the country’s trade landscape into a new era of efficiency, compliance, and growth.
