* Says Africa must curb illicit capital flight
* Oil-rich Nigeria, Angola have set up sovereign funds
By Fumbuka Ng'wanakilala
DAR ES SALAAM, Oct 1 Resource-rich countries
should curb illicit financial outflows and set up sovereign
wealth funds to manage windfall revenues from hydrocarbon and
mineral exports, a senior African Development Bank (AfDB)
official said on Monday.
Steve Kayizzi-Mugerwa, development research director at
AfDB, said African countries could finance most of their
development needs through their own resources without depending
on external debt if they properly managed their wealth.
Oil-rich Nigeria and Angola are among African countries that
have set up funds to manage their windfall revenues.
Tanzania, east Africa's second largest economy, has made big
offshore natural gas discoveries and its government said last
year that it also planned to set up a sovereign wealth fund to
ring-fence future earnings from its hydrocarbon wealth.
Some African countries have sought advice from Norway,
considered to have the most transparent and efficient such fund,
and one that is awash with oil money.
"The irony of Africa being richly endowed with natural
resources but continuing to depend on external support for the
provision of basic services is beginning to dawn on many African
countries," said Kayizzi-Mugerwa at a financial transparency
conference in Tanzania's commercial capital, Dar es Salaam.
"Resource-rich countries should set up well-functioning
sovereign wealth funds ... that in theory represent some
self-insurance against capital flight that should favour
autonomy in macroeconomic policy."
Activists said at the meeting that Africa's development was
being hampered by illicit financial outflows to the West.
"Of the roughly $1 trillion that leaves developing countries
in illicit financial flows each year, almost half - a staggering
$500 billion - comes out of Africa," said Semkae Kilonzo,
coordinator of Policy Forum, a network of over 100 Tanzanian
civil society organisations.
"These proceeds of crime, corruption, and tax evasion
represent an unacceptable drain on developing economies that is
equivalent to eight times the size of global foreign aid."
Tanzania, Africa's No. 4 gold producer, has become a focal
point for financial transparency campaigners following big
discoveries of natural gas, uranium and coal.
Zitto Kabwe, who chairs Tanzania's parliamentary accounts
committee (PAC), said multinational corporations were shifting
profits to tax havens from resource-rich African countries.
Tanzania was losing about $1.25 billion a year, and his
committee has launched an investigation to establish the extent
of illicit financial transfers in the country, he said.
(Editing by James Macharia and Catherine Evans)