UN calls on Zimbabwe to curb illicit financial flows

Published: 5 hours ago

The United Nations resident and humanitarian coordinator in Zimbabwe, Edward Kallon, has urged the government to take urgent measures to curb illicit financial flows (IFFs), warning that billions of dollars are being lost to money laundering and other illicit activities.

Recent reports by Zimbabwe's Financial Intelligence Unit (FIU) indicate that the country has lost approximately US$6,15 billion to money laundering over the past five years, averaging US$1,23 billion annually - equivalent to about 3,4% of Zimbabwe's gross domestic product (GDP).

Key drivers of these losses include smuggling (US$920 million), illegal gold and precious stones trade (US$880 million), corruption (US$730 million), fraud (US$500 million), tax evasion (US$300 million), and drug trafficking (US$170 million). The Reserve Bank of Zimbabwe has also highlighted the real estate and motor vehicle dealership sectors as high-risk conduits due to cash-dominated dealings and weak anti-money laundering controls.

Speaking at the Post-Fourth International Conference on Financing for Development held in Harare, Kallon said the government should strengthen tax systems, fiscal governance, and policy implementation to generate sustainable domestic revenue.

"Implementing progressive taxation, reducing illicit financial flows, and expanding the formalisation of the informal economy through incentives can generate domestic funds vital for development," Kallon said.

He noted that global support in the form of Official Development Assistance (ODA) has declined, leaving vulnerable populations exposed. Developing countries, including Zimbabwe, face mounting debt burdens, limited access to affordable financing, currency instability, and recurrent climate shocks.

Kallon emphasised the need to reduce rent-seeking behaviour and ensure that tax revenues are effectively utilised for national development. He also called for stronger financial institutions, enhanced regulatory frameworks, and improved transparency in resource management.

"Central to these efforts is the adoption and implementation of sustainable policies that promote social inclusion through devolution, environmental sustainability, and resilient economies," Kallon said.

He encouraged Zimbabwe to advocate for greater representation of developing countries in multilateral institutions, advance debt relief initiatives, improve concessional financing terms, and ensure that climate finance aligns with national priorities.

Kallon's remarks highlight the urgent need for Zimbabwe to plug leaks in the financial system, protect public resources, and strengthen governance to achieve long-term development goals.
- Newsday

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