Corruption and illicit financial flows emerged to be among the greatest threats towards the financing of Sustainable Development Goals (SDGs).
This emerged during an inter-active session that looked at creative and innovative ways of domestic resource mobilization and tools towards the implementation of SDGs at a Youth Training of Trainers one-day workshop organized by the United Nations Zimbabwe and TheSpace that was held at Cresta Jameson Hotel in the capital on Friday.
Amarakoon Bandara, the United Nations Development Programme (UNDP) Economics Advisor made the remarks while contributing on the topic on financing modalities for the SDGs at the workshop meant to strengthen youths’ competencies for engaging, contributing and managing programming that feeds into the realization of SDGs at national level.
“My presentation focuses on three key financing modalities namely Domestic Public Financing; Private sector financing and Official Development Assistance (ODA). Domestic public financing challenges include a weak macroeconomic environment; tax evasion, poor management of expenditure, high leakages (corruption/wastage, illicit financial flows) and the general mismanagement of resources,” Bandara said.
The economist singled out corruption and illicit financial flows as the greatest hindrances in domestic pubic financing.
“In Africa, Zimbabwe included, hundreds of billions of dollars go out of the country without trace. Thus domestic revenues are lost annually through capital flight, tax evasion, transfer pricing by transnational corporations and excessive rents on debt repayments,” Bandara said.
Bandara outlined a raft of measures meant to strengthen public financing. He cited the need to invest more in improvement of tax administration saying it was important to simplify and rationalize the tax policy and increase the tax base to reach those involved in the informal sector.
“Increases in tax base result in more socially acceptable increase in revenue than an increase in the rate. This means that it’s also important to tap into eligible informal sector entities for tax revenue. The continent’s large informal sector holds considerable financial resources that are not deposited in savings accounts or pass through other formal financial channels.
“It is of paramount importance to stem the tide of illicit financial out flows, wastage and corruption. This can be achieved through prudent macroeconomic and expenditure management systems.”
The role that private financing plays need not be overemphasized for it should be borne in mind that private investors are concerned about the safety and security of their investments. They are concerned about the cost of doing business which includes the cost of labour, time taken to approve investment deals and availability of water and electricity among others.
“At the core of this is ensuring policy clarity by making sure that the policies are clear and remain consistent. This should be coupled with a strong macro-economic environment with strong financial systems in place. Corruption repels investors and there should be institutional mechanisms to address the vice including the establishment of independent anti-corruption commissions and efficient legal systems,” Bandara said.
He added that the youths can be involved in SDG financing by embarking on income generating projects and adopting a culture of participating in economic activities.
By Byron Mutingwende