Tailoring illicit financial flows reporting for your audience

Illicit financial flows (IFFs) – the illegal movement of money across international borders – often feel like an abstract concept for journalists. Stories discuss billions vanishing into offshore accounts, impacting development goals that seem distant from everyday life. However, for the media, there is a significant opportunity to bridge this gap, making IFFs a relatable and impactful subject that resonates with audiences and drives action.

Understanding illicit financial flows

Illicit financial flows involve the illegal movement of money or capital from one country to another. This can occur through tax evasion, corruption, trade misinvoicing, money laundering, and other forms of financial crime. IFFs undermine revenue mobilisation efforts, weaken governance, exacerbate debt, and stifle economic development. The losses incurred through IFFs directly impact public services, infrastructure, and community welfare. IFFs also affect social development through their impact on the quality of political institutions, tax systems, and social cohesion. IFFs from illegal sources are more frequent in less developed countries with generous raw material endowments and weak institutions, whereas IFFs for the purposes of tax evasion are mostly found in middle-income countries with relatively well-developed tax systems.

Revenue mobilisation and governance

One of the most immediate impacts of IFFs is the erosion of the tax base. African governments lose substantial revenue that could otherwise fund essential services such as healthcare, education, and infrastructure. These economic factors all play a role in a nation’s ability to thrive. For instance, reduced government revenue due to IFFs can lead to a decrease in public investment, stifling economic growth and job creation. For journalists, exploring the connection between IFFs and weakened revenue mobilisation provides a tangible angle. Investigative pieces can reveal how tax evasion and avoidance by multinational corporations and wealthy individuals deprive communities of vital resources.

Development and public services

The development implications of IFFs are profound. Funds siphoned out of African economies could otherwise be invested in development projects that improve living standards and promote sustainable growth. Ultimately, IFFs limit the ability of governments to provide basic goods and services, impacting fundamental rights like health and education. This can lead to public dissatisfaction, social unrest, and even conflict. Reporting on specific projects stalled or abandoned due to lack of funding can help readers understand the real-world consequences of IFFs. Highlighting success stories where recovered assets have been reinvested into development projects can also provide a positive perspective.

Trade and debt

IFFs significantly impact trade and debt. Trade misinvoicing, a common method of illicit financial flow, distorts trade statistics and hampers economic planning. Additionally, the outflow of capital exacerbates debt burdens, as governments are forced to borrow more to compensate for lost revenue. Journalists can use case studies of countries where trade misinvoicing has skewed economic data or where debt levels have soared due to capital flight.

Corruption

Corruption is both a cause and consequence of IFFs. Public officials may engage in corrupt practices to facilitate illicit flows, while the existence of IFFs can further entrench corruption by providing the means to conceal illicit gains. Investigative reporting on high-profile corruption cases and their link to IFFs can shed light on the systemic nature of the problem. Court judgements and legal proceedings offer rich material for in-depth analysis and reporting.

Productivity and human development

The impact of IFFs extends far beyond a simple reduction in government spending on social services. Research by the UN Conference on Trade and Development (UNCTAD) suggests a strong correlation between IFFs and stagnating or declining productivity across various sectors in Africa. By hindering these investments, IFFs cripple a nation’s ability to improve productive capacities, optimise resource efficiency, and ultimately achieve sustainable economic growth. Curbing IFFs, therefore, is also about social justice, ensuring basic human rights, and building a future where prosperity is shared and long-lasting.

How to tailor the story

  • Move beyond national-level statistics and focus on specific sectors – extractives, timber, or fisheries – where IFFs drain resources from local communities. Investigate environmental damage, lost jobs, and stalled infrastructure projects directly linked to these illicit outflows.
  • Humanise the data by putting a face on the financial losses. Profile individuals or communities negatively affected by IFFs. Show how diverted funds could have provided essential services or supported local businesses.
  • Investigate corporate finance and business practices within your country. Scrutinise trade deals and tax breaks that might be facilitating IFFs. Partner with investigative journalism organizations for cross-border collaboration to track these financial flows.
  • Investigate the financial statements and disclosures of multinational corporations operating in your country. Look for red flags that might indicate transfer pricing or profit shifting schemes used to facilitate IFFs.
  • Showcase initiatives by civil society organisations or government agencies that are working to curb IFFs. Analyse their effectiveness and potential for replication in other communities.
  • Frame the narrative around local priorities. Link the issue of IFFs to everyday concerns of citizens. For example, investigate how illicit outflows are impacting the rising cost of food or limited access to education in specific regions.

Shortlist of resources for reporting on IFFs

  1. Global Financial Integrity (GFI) – Offers research reports, policy analysis, and data on illicit financial flows globally, with a focus on trade misinvoicing and capital flight.
  2. Tax Justice Network (TJN) – Provides comprehensive resources on tax havens, tax avoidance, and evasion, and their impacts on global and local economies.
  3. Financial Transparency Coalition (FTC) – A global network of civil society, governments, and experts advocating for transparency and accountability in financial systems.
  4. International Consortium of Investigative Journalists (ICIJ) – Known for major investigations such as the Panama Papers and Paradise Papers, offering tools and resources for investigative journalism.
  5. Transparency International – Focuses on combating corruption and promoting transparency, providing research, reports, and advocacy materials.
  6. United Nations Conference on Trade and Development (UNCTAD) – Offers research and policy recommendations on trade, investment, and development issues, including IFFs.
  7. African Union High-Level Panel on Illicit Financial Flows from Africa – Provides insights and reports specific to the African context, including the landmark Mbeki Report on IFFs.
  8. OECD Centre for Tax Policy and Administration  – Offers resources on international tax policies, including efforts to combat tax avoidance and IFFs.
  9. Publish What You Pay (PWYP) – A global coalition advocating for transparency in the extractive industries, providing resources on financial disclosures and IFFs.
  10. OpenCorporates – The largest open database of companies in the world, useful for investigating corporate structures and ownership.
  11. The Stolen Asset Recovery Initiative (StAR) – A partnership between the World Bank Group and the United Nations Office on Drugs and Crime (UNODC) focused on asset recovery and combating corruption.
  12. Investigative Dashboard – Provides tools and databases for investigative journalists, including resources on financial investigations.
  13. Fact Coalition – Focuses on promoting financial transparency and accountability, offering reports and advocacy materials on IFFs.
  14. African Tax Administration Forum (ATAF) – Provides resources and training for tax administrations in Africa, with a focus on combating tax evasion and IFFs.
ACME Mwalimu

The African Centre for Media Excellence's training unit, known as ACME Mwalimu, scours news platforms and online resources to curate the best training tips and resources for journalists and media organisations, empowering them to become impactful contributors to public debate and development. If you have a training tip or question, you can reach out to ACME Mwalimu at training[at]acme-ug.org.

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