Africa loses $50 billion a year to illicit financial outflows, money that could fund universal health coverage, says Nigeria’s Finance Minister Ngozi Okonjo-Iweala
By Stella Dawson
WASHINGTON (Thomson Reuters Foundation) – Africa is losing $50 billion in illicit finance from tax evasion and transfer pricing each year, money that could be used to finance social welfare, Nigeria’s Finance Minister Ngozi Okonjo-Iweala said on Friday.
“We could finance health and education if we put in place a system to bring that money back,” Okonjo-Iweala said at a panel on healthcare held by the World Bank in Washington.
Two weeks ago, Nigeria announced plans for universal healthcare coverage, and Okonjo-Iweala is looking for ways to finance those plans.
She said she was astonished by the findings on illicit flows from Africa by a commission led by former South Africa president Thabo Mbeki that were presented at a briefing for ministers attending the World Bank/International Monetary Fund spring meetings.
Margaret Chan, director-general of the World Health Organisation, applauded the finance minister for zeroing in on illicit funds lost to development.
“Watch out corruption! Watch out tax evasion! It is coming,” Chan said.
Currently about one-third of healthcare in Nigeria is public, and two-thirds private of which 95 percent is paid out of pocket, Okonjo-Iweala said.
Among the options she is examining for financing an expansion of coverage is to raise the country’s value added tax by a few percentage points from its relatively low level of 5 percent. The so-called “sin taxes” on tobacco and alcohol, frequently targeted to finance healthcare, already are quite high, she said.
Before raising taxes, however, the minister said she first wants to ensure health-care delivery is more efficient, and she appealed to development economists attending the World Bank meetings to help finance ministers like herself examine the best ways to extend health coverage, given the competing agendas – finance, water, education - they face.
“Investing in health pays, but we have got to pay for that investment in health,” she said. “So my message is: How?”
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