Namibia Loses N$4.6 Billion Annually to Money Laundering and Bribery, Urgent Action Required
Namibia is facing a significant challenge in tackling illicit financial flows (IFFs), as it loses an estimated average of N$4.6 billion annually to money laundering, bribery, and tax evasion, according to a report by the think tank Global Financial Integrity. This alarming figure has prompted calls for urgent action to address the issue.
The Bank of Namibia (BoN) recently completed a pilot project aimed at defining, estimating, and sharing data on IFFs from the country. The project’s findings will soon be presented to the Cabinet for approval, after which the estimated IFFs in Namibia will be disclosed to the public.
The report from Global Financial Integrity also revealed that between 2009 and 2018, IFFs originating from Namibia amounted to a staggering N$46.9 billion, with an average annual outflow of N$4.6 billion. In 2013 alone, Namibia ranked 14th in Africa and 65th globally in terms of IFFs, with an average of N$17.7 billion per year and a cumulative total of N$177.7 billion over the period from 2004 to 2013.
To address the issue of IFFs, the Bank of Namibia has established a temporary national project office under Sustainable Development Goal 16.4.1. This office will oversee the implementation of a National Action Plan to combat IFFs. However, Namibia is currently under increased scrutiny by the Financial Action Task Force (Faft) due to identified weaknesses in its efforts to combat money laundering and the financing of terrorism. If the country fails to comply with the United Nations Convention on Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation by October 2023, it risks being greylisted by the FATF.
Being financially sanctioned by the FATF would have severe repercussions for Namibia, including adverse effects on foreign direct investment, capital flows, and compliance costs. To avoid this outcome, urgent bills have been tabled in the National Assembly, including measures to strengthen the police, criminal procedure, and prevention of organized crime laws.
Political leaders and experts in Namibia have expressed concerns about the impact of IFFs on the country’s financial health and economy. McHenry Venaani, leader of the Popular Democratic Movement, highlighted the need for stricter compliance and regulation mechanisms, including tighter control over cross-border transactions. Venaani also advocated for greater tax transparency by multinational corporations, and the use of modern technologies to detect financial anomalies and discourage financial crimes through stricter legislation and heavier penalties.
Independent researcher Josef Sheehama emphasized the negative consequences of being financially sanctioned, making it more costly and cumbersome to do business. He urged Namibia to address the deficiencies in its anti-money laundering regime, particularly in light of the Fishrot corruption scandal that has brought the issue of money laundering to the forefront.
The issue of IFFs is not unique to Namibia, as estimates by the United Nations Economic Commission for Africa suggest that over US$84 billion is lost annually in IFFs from Africa. Both corporations and government officials, both domestic and international, contribute to these illegal practices, making it difficult to crack down on such activities.
In conclusion, the alarming amount of money lost to money laundering, bribery, and tax evasion in Namibia necessitates urgent action to address illicit financial flows. The country is under scrutiny from international bodies and faces the risk of financial sanctions if it fails to comply with anti-money laundering and terrorism financing regulations. Stronger compliance measures, tighter control over transactions, and greater transparency in tax cooperation and multinational corporations’ earnings reporting are seen as essential steps in combating IFFs. Failure to take action could have severe economic consequences for Namibia.
