ANALYSIS Ange-Dorine Irakoze 23 December 2021
Illicit financial flows (IFFs) are an international concern since they are inimical to the right to development provided in the UDHR, ICCPR and ICSECR. (1) Further, IFFs run afoul the spirit of the UN Declaration on the Right to Development 1986, 2030 Agenda for Sustainable Development and UN Sustainable Development Goals and applicable African regional laws. The concern has been replicated by State levels who are now increasingly combatting IFFs by providing means of enforcement of the right to development.
As far as the right to development is concerned, Burundi has subscribed to not only the International Bill of Rights but also the international frameworks above. Additionally, Burundi’s Constitution recognizes sustainable development as a vital domain to be regulated and thus paves way for enforcement of right to development. Also, the Burundian Mining Code 2013 is crafted in line with the sustainability goals contained in the Pact on Security, Stability and Development in the Great Lakes Region signed in Nairobi , 2006. (2) The Code’s requirement for the conduct of a socio-economic impact study as a formality for grant of permits is just but an example of demonstrable political will of Burundi to protect the right to development in its extractive sector.
Lack of Implementation and Ongoing Illicit Financial Flows
The above select approaches project Burundi as a State which is committed in its obligation to continuously improve its domestic capacity for revenue collection and to combat IFFs in the extractive sector. The legislative framework, if enforced, bears immense potential to place Burundi onto a path of mobilizing domestic resources for sustainable economic development.
However, Burundi’s extractive sector is still susceptible to IFFs. This phenomenon is attributed to many factors, which I conveniently categorize into three main areas. First, Burundi has inadequate means of controlling quantities of natural resources exported abroad. Second, there are numerous instances of tax evasion in the country. Lastly, there have been many cases of tax mis-invoicing by companies. (3) The phenomenon is an obvious cause for concern considering Burundi is among States with massive sums of financial resources. It also paints a picture of probable lack of commitment to implement the African Commission on Human and Peoples’ Rights’ Resolutions 236 and 367 that call for effective domestic and regional frameworks and mechanisms to eradicate IFFs in the extractive sector.
Interestingly, the challenges have also been frustrating the Government itself. In turn, the Government has recently resorted to suspension of some licences of international extractive companies. (4) Some affected companies are those that are ‘seen’ as not contributing to Burundi’s development owing to ‘suspected’ tax avoidance and false invoicing. (5)
The frustration brings two main perspectives. First, the extent to which lack of transparency into financial resource outflows from Burundi’s extractive industry has immense potential to narrow the national tax base, which in turn impairs its ability to achieve the right to development from its resources. Second, it points to possibly dysfunctional mechanisms of detecting and combatting IFFs in the sector.
Combating Illicit Financial Flows as a Precondition for Sustainable Development
The above discussion has established the nexus between sustainable development and IFFs. With this hindsight, the future of combatting IFFs shall depend on adoption ofwell-structured legal and institutional frameworks to stipulate, monitor and implement the law on sustainable development.
The government of Burundi should rethink and re-assess the structure of relevant institutions including Burundi Revenue Authority, the Burundian Mining and Carry Authority, and Ministries responsible for Mining. As they exist currently, these institutions have a narrow view of their mandate and are therefore ill equipped to maintain a functioning control systematic of financial flows channels.
Burundi’s reform process for the legal and institutional frameworks for combatting IFFs is long overdue. Considering the relationship between human rights, sustainable development, and combatting of IFFs, this Human Rights month presents a moment of reflection on how Burundi can seize every opportunity to reform its regulatory and institutional frameworks. In having this approach, those who implement policy must view revenue collection not an aim in itself, but as a means for enforcement of human rights, particularly the right to development and enabling redistribution, for development and human rights.
(1)Irene Musselli and Elisabeth Bürgi Bonanomi, “Illicit Financial Flows: Concepts and Definition”, International Development Policy | Revue internationale de politique de développement [Online], 12.1 | 2020, Online since 18 February 2020, connection on 16 December 2021. URL: http://journals.openedition.org/poldev/3296; DOI: https://doi.org/10.4000/poldev.3296, p. 48.
(2) Law N°1/21 of 15 October 2013 regulating the Mining Sector in Burundi, Article 42 (3),
(3) Ibid (n 1).
(4) Official Statement released by the Government on 14 July 2021.