Financial Crime World

Namibia Loses Billions Annually to Tax Evasion and Financial Crime: Report

Namibia’s Financial Crisis: A Staggering Loss of N$46.9 Billion

A recent report by Global Financial Integrity has revealed that Namibia loses an average of N$4.6 billion annually due to money laundering, bribery, and tax evasion through illicit financial flows (IFFs). Between 2009 and 2018, IFFs originating from Namibia reached a staggering N$46.9 billion.

Bank of Namibia’s Pilot Project: A Step Towards Transparency

The Bank of Namibia (BoN) has announced the successful conclusion of a pilot project focused on defining, estimating, and sharing data regarding IFFs from Namibia. The report highlights that the country is expected to comply with the United Nations Convention on Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation by October 2023.

  • Potential losses suffered by public finances, including uncollected value-added tax, customs duties, and corporate taxes, will be calculated as part of the report.
  • The findings will be tabled before Cabinet and once approved, the calculations of estimated IFFs in Namibia will be disclosed.

Risks of Non-Compliance

Namibia has been identified as having weaknesses in its efforts to combat money laundering and the financing of terrorism. Failure to comply with the UN convention by October 2023 risks financial sanctions from the Financial Action Task Force (FATF).

  • The country is expected to strengthen its laws and regulations to combat money laundering and terrorist financing.
  • Urgent bills have been tabled in Parliament to address these issues, including the police amendment bill, criminal procedure amendment bill, and others aimed at strengthening laws.

Concerns from Political Leaders

Popular Democratic Movement leader McHenry Venaani has raised concerns about the importance of preventing the diversion of profits into low-tax jurisdictions. He called for stricter compliance and regulation mechanisms, including tighter control over cross-border transactions.

  • Independent researcher Josef Sheehama emphasized the need to fix Namibia’s financial instruments, warning that being financially sanctioned would have negative consequences for the country’s economy.
  • The Fishrot corruption scandal has placed Namibia under scrutiny for money laundering and financial crimes.

Africa’s Financial Crisis: A Staggering Loss of US$84 Billion

According to estimates by the United Nations Economic Commission for Africa, more than US$84 billion is lost in IFFs from Africa each year. Corporations and government officials were identified as the main channels for these leakages, making it especially hard to crack down on illegal practices.

Conclusion

Namibia’s financial health is at risk due to the ongoing loss of resources through illicit outflows. It is crucial that the country strengthens its laws and regulations to combat money laundering and terrorist financing to avoid being financially sanctioned by the FATF.