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Copenhagen Consensus Center

Post-2015 Consensus: IFF Viewpoint, Kilonzo

Viewpoint Paper

Semkae Kilonzo from the Policy Forum appreciates the description of IFF and its impacts on the economy and inequality but believes that a universally acceptable definition of beneficial ownership is still needed to permit robust target setting. The paper would be improved by a brief explanation of the structural factors which allow IFF to develop, including rising trade openness devoid of oversight and regulation and the existence of an underground economy and political instability. Illicit flows typically involved earnings from criminal activities and there could have been more clarity on how the proposed measures could help curb the drugs trade, human trafficking and poaching. 

He also points out some of the difficulties in implementing Cobham’s proposed alternative targets. For example, the paper overlooks the importance of building a business case to support the targets, which are likely to be resisted by multinational corporations, despite the results of the PwC survey. There is, in fact, a growing discussion of the importance of businesses treating transparency as a strategic imperative rather than simply a compliance issue. 

As well as having business buy-in, a multi-stakeholder platform is needed both to monitor progress and help meet the suggested targets. The Kimberley Process to curb the flow of conflict diamonds and the Extractive Industries Transparency Initiative are examples from other sectors. Those at the frontline making the proposed initiatives work will be country-level Civil Society Organizations, and these need to be included. 

A southern perspective is also needed to pre-empt critics who say that there will be high implementation costs for developing nations, and that they may not have the necessary resources or capacity. It would be helpful if the OECD, for example, could include tax administrations which are not from member countries. If Africans are not involved at the outset, the system will lack their input and the proposed targets will be hard to achieve without their buy-in.