By Hilary Mare
CAPITAL flight and illicit outflows are well-known enemies of African development, but the issue of misinvoicing is still largely unexplored, as a contributing factor.
There has been very little consideration of this miscreant in Namibia’s national blueprints, but it is worth noting that a study published by the United Nations Conference on Trade Development (UNCTAD) last year revealed huge discrepancies in trade accounting in most sub-Saharan nations, including the Land of the Brave.
The report showed that the trade data records (imports and exports) for developing nations – over a period of 14 to 20 years – did not match those of their trading partners, for selected commodities.
The report revealed that there was significant export misinvoicing in the countries scrutinised.
These discrepancies, according to the report, amounted to tens of billions of dollars or 67 percent of commodity exports, in some countries.
Significant amounts of lost revenue and foreign exchange earnings, due to trade misinvoicing (under-invoicing and over-invoicing), hold devastating implications for Namibia, as the country’s financial inflows are highly dependent on commodities.
In a bid to realign goals, and take a significant look at the above, it is time that the Namibian government considers the seriousness of the implications of trade misinvoicing.
Even if these discrepancies are statistical artefacts of wrong trade reporting formats, they signify bad or inaccurate bilateral trade data or information, and that too has a debilitating effect on an economy, particularly on growth and development efforts.
Central to the solution for these challenges, are two important activities that are critical to economic management and planning – resource mobilisation and reliable information or data.
Resource mobilisation is a critical component of financial decisions, including when a country should invest in various facets of the economy, like health, education and infrastructure.
Reliable information and data are vital for planning, monitoring and economic management decision-making. The failure to manage these two activities effectively has been a challenge in Namibia, and this needs to be resolved as a matter of urgency.
Further undesirable economic leakages, such as capital flight in the case of export misinvoicing and smuggling in the case of import under-invoicing, are two detrimental consequences that Namibia must avoid at all costs.
We need to urgently strengthen local institutions, to monitor economic activity and generate accurate and timely information and data.
The persistent combination of poor data, inaccurate information, revenue leaks and unchecked trade loopholes make economic management ineffective and development planning unrealistic.
It is time to take a much deeper look at resourcing, in order to create better managed institutions, especially trade-related ones.
Confidente. Lifting the Lid. Copyright © 2015