By Peter Wiezel and Otsile Malebaco

Illicit Financial Flows (IFFs) pose a challenge for Africa and specifically for Malawi, undermining efforts to achieve sustainable development. These flows, which are estimated to exceed $90 billion annually from Africa, are primarily driven by tax evasion, trade mis-invoicing, money laundering, and corruption. They drain crucial resources from the continent, exacerbating poverty and inequality while hindering economic growth in Africa.

In-Country Measure to Malawi: A Collaborative Approach

To combat this pressing issue, an in-country measure to Malawi in the form of a training workshop was held in Blantyre, Malawi from 19-21 November 2024. This workshop aimed to enhance inter-agency collaboration among key stakeholders such as the Reserve Bank of Malawi (RBM), the Financial Intelligence Authority (FIA), the Malawi Revenue Authority (MRA), and the Malawi Police Service (Fiscal Department).

The workshop served as a platform for participants to deepen their understanding of IFFs, outline the interconnections and necessity of cooperation between different authorities, and improve their analytical and investigative skills. The workshop focused on several key objectives:

• Understanding IFFs: Enhancing knowledge regarding the drivers and implications of illicit financial flows.
• Analytical Skills: Improving participants’ abilities to analyse and investigate potential IFF cases.
• Money Laundering Recognition: Identifying elements that may indicate money laundering activities.
• Inter-Agency Collaboration: Strengthening cooperation among various agencies while respecting their distinct roles.
• Legal Frameworks: Increasing comprehension of both domestic and international legal frameworks designed to combat IFFs.

From Theory to Practice

The training began with presentations on the fundamental drivers of IFFs, domestic and legislative challenges, and successful case studies in investigation and prosecution. Participants engaged in discussions about the importance of a robust national legislative framework that facilitates cooperation between authorities.

In practical sessions, participants worked in breakout groups to tackle complex case studies related to various IFF channels. This approach aimed to identify risks associated with IFFs and develop strategies for preventing illicit financial outflows from Malawi by leveraging the diverse expertise within each agency.

Looking Ahead

The workshop not only fostered strong connections among participants but also laid the groundwork for ongoing collaboration among national agencies. The GIZ project in Malawi is poised to align its initiatives with the outcomes of this workshop, addressing follow-up processes and challenges identified during discussions. Through enhancing inter-agency cooperation and building capacity to combat IFFs effectively, this initiative represents a significant step towards safeguarding Malawi’s domestic resources and improve overall governance.

This in-country measure was organised through the Multi-Donor-Action “Fighting Tax-Related Illicit Financial Flows in Africa”, co-financed by the European Union, the German Federal Ministry for Economic Development and Cooperation (BMZ) and the Ministry for Foreign Affairs of Finland, implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). On this occasion, the bilateral GIZ program “Strengthening Public Financial and Economic Management (PFEM) – TIkuze Malawi”, co-funded by BMZ and the EU, joined as a co-organiser and local partner.