REQUEST FOR EXPRESSIONS OF INTEREST
AFRICAN DEVELOPMENT BANK
Immeuble CCIA, Avenue Jean-Paul II
01 B.P. 1387, Abidjan, Côte d’Ivoire
Web Site : www.afdb.org
GOVERNANCE AND PUBLIC FINANCIAL MANAGEMENT COORDINATION OFFICE (ECGF)
RECRUITMENT OF AN INDIVIDUAL CONSULTANT TO UNDERTAKE A CAPACITY BUILDING ASSESSMENT ON COMBATTING ILLICIT FINANCIAL FLOWS IN FOUR COUNTRIES IN THE SOUTHERN AFRICA REGION – MADAGASCAR, MAURITIUS, MOZAMBIQUE AND ZAMBIA
Expressions of interest are being requested for an individual consultant to undertake a capacity building assessment on combatting illicit financial flows in four countries in the Southern Africa Region – Madagascar, Mauritius, Mozambique and Zambia.
Brief description of the assignment : The consultant will be required to carry out a study to identify the main drivers of illicit financial flows and assess the adequacy of institutional frameworks and capacity to combat them in the four selected countries in order to propose and inform policy responses to strengthen the combat against illicit financial flows.
Department issuing the request : Governance and Public Financial Management Coordination Office (ECGF).
Place of assignment : The consultant will work remotely
Duration of the assignment : 6 months
Tentative Date of commencement : October 2021
Detailed Terms of reference for the assignment : (see below)
Deadline for applications : 2 October 2021
Applications to be submitted to : k.gebre-selassie@afdb.org copied to c.ahouansou@afdb.org.
Interested Consultants must register on the AfDB E-Consultant site at https://econsultant.afdb.org/sap/bc/webdynpro/sap/zdac_wd_login_page/# and advise c.ahouansou@afdb.org on the webcode that will be issued, or share their DACON number if they are already registered. Please use Internet Explorer to access the E-Consultant application.
Any questions and requests for clarifications may be sent to k.gebre-selassie@afdb.org copied to c.ahouansou@afdb.org.
TERMS OF REFERENCE
INDIVIDUAL CONSULTANT – CAPACITY BUILDING ASSESSMENT ON COMBATTING ILLICIT FINANCIAL FLOWS IN SELECTED COUNTRIES – MADAGASCAR, MAURITIUS, MOZAMBIQUE AND ZAMBIA
INTRODUCTION :
The Governance and Public Financial Management Coordination Unit (ECGF), as part of the Economic Governance and Knowledge Management Complex (ECVP), is responsible for coordination of operationalization of the Bank’s governance policy, strategy and programmes, including lending and non-lending work. ECGF works in collaboration with key Departments within the Bank, regional and international organizations in providing leadership and coordination for Bank’s substantive engagement with key policy and strategy processes in economic and financial governance matters. It is also responsible for generation of analytical works to inform the design of governance and public financial management operations, policy dialogue, and institutional capacity building and technical assistance to regional member countries. It coordinates the design and delivery of Bank’s governance interventions in Regional Member Countries, through program based operations/ budget support and institutional strengthening projects, with the aim to promote effective and accountable governance and public financial management systems.
ECGF is the technical unit of the Bank with lead responsibility for the coordination and operational implementation of the Bank’s Strategy for Economic Governance in Africa (SEGA) 2021-2025 which is the framework for the Bank’s support to its Regional Member Countries (RMCs) to improve their economic governance, including through boosting public financial management (PFM), promoting transparency and accountability in public service delivery, stimulating government effectiveness, building business enabling environments, fighting corruption, and enhancing the institutional frameworks required to efficiently manage the economy at the national and sub-national levels.
Bank’s Strategy for Economic Governance in Africa (SEGA) 2021-2025 highlights the importance of supporting RMCs in the fight against Illicit Financial Flows (IFFs) and money laundering. Indeed, preventing IFFs and money laundering is seen as key to combatting corruption and to increasing domestic resource mobilization, both of which are sub-pillars of the strategy. Under SEGA, efforts to tackle IFFs will include (i) eliminating tax loopholes and facilitating tax controls, (ii) establishing public registries of verified beneficial ownership of legal entities and assets, and (iii) building state capacity to address trade mispricing and mis-invoicing. Further, the Bank Group Strategic Framework and Action Plan on the Prevention of Illicit Financial Flows in Africa (2017-2021) prioritized capacity building of RMCs and RECs to effectively combat IFFs. Curbing IFFs will also require enhanced international collaboration and the adoption of international standards, such as the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) and the Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI). To deliver on these efforts, the strategy underlines the importance of knowledge work as an enabler of both policy dialogue to promote evidence-based policy-reform choices in RMCs as well as in the design of Bank operations to effectively support such reforms.
As per the Bank Policy and Strategic Framework and Action Plan on IIFs, the ECGF leads and coordinates the Bank’s work/activities in the areas of IFFs.
This includes :
- Providing technical and financial support to RMCs to strengthen their institutions and improve their AML/CFT framework and implement international AML/CFT standards ;
- Contributing to analytical work to reinforce thematic operations and advisory services on anti-money laundering, terrorism financing and illicit financial flows, and facilitating the application of targeted support to the Bank’s agenda on the prevention of illicit financial flows, including through technical assistance ;
- Supporting establishment of regional networks on recovery of stolen assets and strengthen existing networks ;
- Collaborating with regional and international institutions on IFFs ;
- Promoting of citizens’ awareness on anti-corruption complaint and the dangers of ML and FT ;
- Strengthening Internal IFFs Safeguards and Knowledge Management. Specifically ;
- Internal Capacity Building for Bank staff and preparation of tool kits to assist staff to recognize suspicious AML/CFT activities ;
- Mainstreaming IFF issues into all Bank Group CSPs, RISPs and ESWs, taking into account the systematic mainstreaming into these documents of IFFs risks, especially in fragile states ;
- Preparing and circulating advice on trends in IFFs.
It is in this context, that ECGF is looking to hire a consultant to undertake a capacity building need assessment on combatting IFFs in selected countries including: Madagascar, Mauritius, Mozambique and Zambia.
BACKGROUND AND CONTEXT :
The Bank Group Policy on the Prevention of IFFs adopts the AU-UNECA High Level Panel (HLP) definition of IFFs as money illegally earned, transferred, or used. The definition adapts that of Baker (2005): “money that is illegally transferred and illegally utilized”. Other organizations including the UN, Global Financial Integrity, and World Bank, amongst others, also adopt the Baker’s definition and there is agreement among these organizations that, relating to its origin or during movement or use, the flow of money that has broken laws is considered illicit.
The magnitude of IFFs flowing out of Africa is unclear, but it is considered to be significant. In its report Tackling Illicit Financial Flow for Sustainable Development in Africa, the United Nations Conference on Trade and Development (UNCTAD, 2020) notes that one-sixth of the continent’s aggregate government revenue comes from corporate taxation and roughly a 10th of that revenue (roughly US$6.7 billion) is lost to tax avoidance. The report estimates annual capital flight from Africa at US$88.6 billion. The report of the High Level Panel on Illicit Financial Flows from Africa1 estimates that at least US$30 billion to US$60 billion per annum flow out of Africa in the form of IFFs, although this figure could well be higher. These figures would indicate that in reality Africa is a net creditor to the world rather than a net debtor and this resource drain is negating the impact of economic growth on the continent. Indeed, some reports estimate that for every dollar of development assistance that developing countries received over the 10 year period (2003-2012) 10 USD left in the form of illicit financial flows2.
Curbing IFFs is key to improving governance and stemming the leakage of resources critical to funding Africa’s investment needs. IFFs divert resources away from priority sectors such as health, education, and infrastructure to efforts to fight illegal activities. A UNDOC report points out that in certain cases, the value of resource flows of criminal and contraband goods is worth more than the security budgets of some countries. IFFs in the form of tax evasion and trade :
- “United Nations. Economic Commission for Africa (2015). Illicit financial flows: report of the High Level Panel on illicit financial flows from Africa. Addis Ababa. UNECA. https://hdl.handle.net/10855/22695” ;
- Global Financial Integrity (2014). Illicit Financial Flows from Developing Countries: 2003-2012. https://gfintegrity.org/report/2014-global-report-illicit-financial-flows-from-developing-countries-2003-2012/
mispricing not only erode the tax base for domestic resource mobilization but also place a disproportionate burden on smaller domestic firms, with consequences for employment generation. In the extractive sector for example, IFFs have impacted on the ability of African countries to mobilize resources generated from sectors such as minerals and oil to finance their development. While IFFs occur in all countries – and are damaging everywhere – IFFs have particularly significant economic and social consequences for African countries. Across the continent, IFFs have been proven to be a key driver of state fragility and human insecurity, resourcing brutal and protracted conflicts. The situation is worse in fragile and post conflict countries which run a risk of recurrence of conflict.
Combating illicit financial flows depends on the quality of national regulations, their implementation and whether they comply with international best practices. Successful strategies to address these related threats need to be well informed, dynamic, and adaptive. The nature of IFFs varies across RMCs. Different approaches to tackling the problem will therefore be adopted in mineral exporting countries, countries with acute fiduciary issues and countries in fragile situations. Indeed, while IFFs are an inherently international phenomenon they are also driven by dynamics at the national level. Therefore, effectively combatting IFFs requires an in-depth understanding of the drivers of IFFs at the national, regional, and global levels to develop and implement evidence-based policy responses at both national and international level.
Given the growing evidence of the scale of the impact of IFFs on African countries, the Bank, as Africa’s premier development finance institution, is seeking to deepen its understanding of its drivers to develop and support effective solutions for the benefit of its RMCs. The scale of the resource drain of IFFs for African countries, and its impact on their ability to finance investments to tackle their development priorities, highlights the urgency Moreover, the COVID-19 pandemic has further underlined the importance of tackling IFFs in Africa, as African countries have found themselves with limited fiscal space to respond to the crisis. Stopping these resources from illegally leaving the continent would make it not only more resilient to such shocks, but also provide it funding to build back better. In light of this, the African Development Bank is further stepping-up its engagement to tackle this issue, which it considers to be of strategic importance to its mission to spur sustainable economic development and social progress in its regional member countries (RMCs). In this context, the Bank is seeking to widen its knowledge base on this issue to enable it to provide leadership in tackling IFFs through high-impact evidence-based interventions in support of its RMCs.
The study will cover four countries in the Southern Africa Region – Madagascar, Mauritius, Mozambique and Zambia – where tackling IFFs is a priority in order to stop their pervasive impact on institutions and mobilize funding critical to finance their development priorities.
OBJECTIVE OF THE ASSIGNMENT :
3.1 The objective of the assignment is to carry out a study to identify the main drivers of IFFs and assess the adequacy of institutional frameworks and capacity to combat them in the four selected countries in order to propose and inform policy responses to strengthen the combat against IFFs. It will complement Bank’s initiatives and program on IFF/AML including the Strategic Framework and Action Plan on the Prevention of IFFs in Africa.
SCOPE OF WORK :
As part of the assignment, the consultant will be responsible for the delivery of the following outputs :
A – The main study report :
- Review the prevalence of IFFs, its characteristics and key drivers in the Southern Africa region and the countries covered by the study. Issues to be covered include: (i) the scale of IFFs and trends over time and the (ii) the composition of IFFs including by source (i.e. corruption, drug trafficking, domestic, international, etc.) ;
- Analyse the key drivers and enablers of IFF in the countries covered by the study, including: (i) composition of the domestic economy (i.e. size of financial sector, size of extractive sector, etc.); (iii) scale of corruption; (v) illegal market activities, scale of tax evasion; (iv) strength and integrity of key institutions (law enforcement, tax authorities, financial supervisors, etc.); (v) degree of transparency of public and private institutions; (vi) role of the international environment (i.e. location, trade and cultural links, proximity to IFF risks/sources, etc.); and (vii) strength of non-government oversight/accountability institutions including civil society and an independent media ;
- Review the frameworks to combat IFFs in the four concerned countries, including the following areas: (i) capacity to monitor IFFs, assess risks and evaluate policy implementation; (ii) legal and institutional framework to combat IFFs; (iii) strategic and policy framework to combat IFFs; (iv) availability of expertise and HR capacity in key institutions; (v) intra-government coordination and policy-making to combat IFFs; and (vi) compliance with international standards/norms and international cooperation ;
- Analyse – including from a comparative perspective – the key areas of weakness (or strength) of the covered countries’ frameworks to combat IFFs ;
- Review past and current reform efforts to combat IFF and assess both their alignment with international best practices and their actual and/or expected impact in resolving the identified key weaknesses. This should include examining the role of development partners in supporting reforms ;
- Present policy recommendations to put in place frameworks to effectively combat IFFs. These recommendations should cover not only governments and governmental entities, but also other key stakeholders in supporting strengthened frameworks to combat IFFs, including civil society and development partners.
B – Policy Note :
- Drafting of a high-level policy note that summarizes the study findings and presents the main policy recommendations for all stakeholders (i.e. the concerned countries, development partners, creditors) ;
C – High-level Webinar :
- Assist in the planning, and delivery of a high-level webinar to present the findings and policy recommendations to stakeholders including, policy practitioners and decision makers, civil society, and regional organizations. This will also entail organizing a high-level policy dialogue in collaboration with RDVP and key Departments within ECVP.
METHODOLOGY :
The study methodology will involve the following (non-exhaustive) :
- Collection and desk review of relevant documentation, including international and national reports, academic literature, news articles, laws and regulations, regional and national anti-IFF strategies, etc. ;
- Collection and analysis of secondary data to gain a quantitative understanding of IFFs in each of the concerned countries, including the scale of IFFs as well as their key drivers and enablers ;
- Consultations and interviews with relevant regional and national agencies (FSRBs, FIUs, anti-corruption agencies), civil society organizations and academic/technical experts to acquire an understanding of IFFs in each concerned country and assess the frameworks to combat IFFs ;
- Comparative analysis of anti-IFF frameworks across the concerned countries to identify gaps and best practices and formulate recommendations.
DELIVERABLES AND TIMELINE :
| # | Description | Timeline | Payment |
| 1 | Inception report outlining the | 7 days after contract signature | 5% |
| consultant’s proposed approach | |||
| and workplan | |||
| 2 | First draft report and Final report | 90 days after contract signature | 50% |
| delivered in line with | |||
| specifications set out in Annex 1 | |||
| of the TORs and incorporating all | |||
| comments and observations from | |||
| the Bank. | |||
| 3 | (i) Delivery of policy note | 120 days after contract signature | 30% |
| summarizing the key findings of | |||
| the study and outlining actionable | |||
| recommendations for | |||
| governments, policy-makers and | |||
| development partners; and (ii) | |||
| Organization of a high-level | |||
| policy webinar to present the | |||
| findings and recommendations. | |||
| 4 | Final report | 130 days after contract signature | 10% |
CONSULTANT QUALIFICATIONS AND PROFILE :
- Master degree in economics, public finance, business administration, accounting, criminology, international relations, law or related field. A PhD would be a significant added advantage ;
- A minimum of ten (10) years of relevant professional experience in governance, anti-corruption and/or public finance. A strong background working in the areas of illicit financial flows and anti-money laundering is a must ;
- Demonstrated ability to methodically conduct independent research and strong drafting skills as evidenced by the publication of relevant reports and/or articles ;
- Demonstrable experience providing high-level policy advice to governments and international organizations ;
- Experience communicating at the highest levels of government and the private sector, including presenting research findings, and facilitating discussions with high-level audiences ;
- Excellent interpersonal skills and ability to maintain effective and cooperative relations with national authorities and development partners ;
- Good knowledge of the role and instruments of multilateral and bilateral development partners in supporting governance, anti-corruption and IFF/AML reforms as evidenced by relevant professional work experience ;
- Good knowledge of, and experience working with relevant institutions including the Financial Action Task Force (FATF), FATF-Style Regional Bodies (FSRB), national Financial Intelligence Units (FIUs) and Transnational Organized Crime Units ;
- Good knowledge of relevant anti-corruption standards and frameworks including FATF standards, the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) and Exchange of Financial Account Information on Tax Matters (AEOI) ;
- Ability to apply innovative approaches, work independently and apply new methods to solve problems, while remaining efficient in a fast-paced, changing, and challenging institutional environment ;
- Advanced knowledge and experience in countries in the Southern Africa region ;
- Strong communication skills in English, both verbally and in writing.
ASSIGNMENT DURATION AND LOCATION :
The period of the contract will be six (6) months. The service of the Consultant shall start in October 2021. The consultant will work remotely.
ANNEX 1: ANNOTATED OUTLINE OF THE COMBATTING ILLICIT FINANCIAL FLOWS CAPACITY BUILDING ASSESSMENT REPORT
- Executive Summary :
This section shall provide an overview of the findings of the study and the key policy recommendations.
- Introduction!
This section shall introduce the objectives and scope of the study, as well as the topic in question.
- The IFF landscape :
This section shall review the prevalence of IFFs, its characteristics and key drivers in the Southern Africa region and the countries covered by the study. Issues to be covered include : the scale of IFFs and trends over time and the (ii) the composition of IFFs including by source (i.e. corruption, drug trafficking, domestic, international, etc.)
- IFF drivers and enablers :
This section shall provide an analysis of the key drivers and enablers of IFF in the countries covered by the study, including: (i) scale of domestic crime; (ii) composition of the domestic economy (i.e. size of financial sector, size of extractive sector, etc.); (iii) scale of corruption; scale of tax evasion; (iv) strength and integrity of key institutions (law enforcement, tax authorities, financial supervisors, etc.); (v) degree of transparency of public and private institutions; (vi) role of the international environment (i.e. location, trade and cultural links, proximity to IFF risks/sources, etc.); and (vii) strength of non-government oversight/accountability institutions including civil society and an independent media.
- Review of framework to combat IFF :
This section shall provide a review of the frameworks to combat IFFs in the four concerned countries, including the following areas: (i) capacity to monitor IFFs, assess risks and evaluate policy implementation; (ii) legal and institutional framework to combat IFFs; (iii) strategic and policy framework to combat IFFs; (iv) availability of expertise and HR capacity in key institutions; (v) intra-government coordination and policy-making to combat IFFs; and (vi) compliance with international standards/norms and international cooperation.
This section shall provide an analysis – including from a comparative perspective – of the key areas of weakness (or strength) of the covered countries’ frameworks to combat IFFs. It should also review past and current reform efforts and assess both their alignment with international best practices and their actual and/or expected impact in resolving the identified key weaknesses. This section shall also examine the role of development partners in supporting reforms.
- Policy recommendations :
This section shall outline the key findings and lessons from the study and present policy recommendations to put in place frameworks to effectively combat IFFs. These recommendations should cover not only the concerned countries, but other key stakeholders in supporting strengthened frameworks to combat IFFs, including civil society and development partners.
- Conclusion :
This section shall present concluding remarks, including a summary of recommendations on the way forward.