There is need to focus on measures that curb illicit financial flows (IFFs) if the economy is to free up state resources to support growth enhancing programmes, an official has said.
State revenues have over the past few years been in an precarious state, with latest national budget figures showing recurrent expenditures outweighing capital expenditure 92 percent to 8 percent.
Although most observers say the greater need is to cut the recurrent expenditure – which is not untrue – Zimbabwe Economic Policy Analysis and Research Unit (Zeparu) executive director Gibson Chigumira believes there is also need to give adequate attention to the problem of IFFs in the country.
“Instituting measures to curb illicit financial flows has greater scope in expanding fiscal space, through institutional co-ordination; information exchange and reducing loopholes that are exploited by cross border crime syndicates.
“Countering IFFs would require strengthening of the legal and institutional frameworks that are fit for purpose; credible, enforceable and adaptable to the dynamic and complex illicit activities that facilitate IFFs,” said the Zeparu boss.
IFFs through tax evasion, bribery, corruption, lack of transparency and accountability in the movement of minerals, as well as porous national borders have cost the country billions.
According to figures from the African Development Bank (AfDB), Zimbabwe has lost around $12 billion to illicit financial flows over the past decade.
Chigumira said there is particular need to inhibit tax avoidance by multinational corporations and to legalize small-scale mining operations.
“Measures need to be put in place to curtail tax avoidance and aversion schemes by multinational corporations including transfer pricing.
“Decriminalizing of the operations of artisanal miners will increase revenue lost through smuggling,” he said.
In Zimbabwe, it has been observed that IFFs are particularly rampant in the mining, forestry, wildlife sectors.