Crooks steal almost R100bn from SA's economy each year
Illicit financial flows are costing South Africa a staggering $3.5 billion annually, nearly 5% of its tax revenue.
Image: RonAI / IOL
Illicit Financial Flows (IFF) – theft – is robbing South Africa of a massive $3.5 billion every year.
That amount translates to almost 5% of the tax revenue that the South African Revenue Service brings in each year, or R92.5bn, according to Deputy Minister of the Department of International Relations and Cooperation, Alvin Botes.
'In 2022 we received roughly $1.1bn (R19.7bn) in official development assistance, but we lose an estimated $3.5bn (R62.7bn) to $5 billion (R89.6bn) each year to tax abuse, trade mis-invoicing, illegal capital transfers and profit-shifting,' said Botes, who was speaking at a conference on illicit financial flows, mobilising domestic resources, and financing for development, hosted at SGN Grant Thornton's offices at the end of last week.
Botes added that 'these losses erode tax bases, shrink fiscal space, weaken institutions and make true sovereignty impossible'. This, he said, means 'children left out of classrooms, hospitals short on medicine, dreams deferred.'
Victor Sekese, SNG Grant Thornton CEO, said that progress is increasingly threatened through IFF, which 'denies our people access to public goods like healthcare, education, infrastructure, and opportunity.'
Quantifying the effect of IFF on socioeconomic development initiatives to improve the lives of all, Botes stated that UN Trade and Development statistics indicate that countries with high illicit flows spend a quarter less on healthcare and more than 50% less on education than their peers.
On a continental level, Sekese said that Africa is estimated to lose over $80 billion annually to these IFF outflows. 'Imagine what we could do with that – build public infrastructure, schools, hospitals and industries,' he said.
Sekese added that it was important not to just have talk shops but to agree on ways to share data, harmonise laws, and hold those who make it possible for IFF to take place accountable. 'Most importantly, to ensure that our recommendations not only inform but shape the final policy proposals presented at the G20 later this year'.
South Africa will host the G20 Johannesburg Summit, the twentieth meeting of the Group of Twenty, on 22 and 23 November. The meeting is set to include heads of state and government, with US President Donald Trump having said the US will attend.
Botes noted that 'the complexity of these crimes also demands deeper inter-agency cooperation, rapid information-sharing and, ultimately, an international legal instrument robust enough to match transnational crime. We therefore call for a United Nations Tax Convention capable of halting Africa's wealth leak and choking multinational tax abuse.'
Let us plug the leaks, mobilise the means and finance the future humanity deserves,' said Botes.
IOL Business
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mail & Guardian
6 hours ago
- Mail & Guardian
Ireland to make education a focal point at G20 meet in SA
Irish Minister of State for International Development and Diaspora, Neale Richmond, visiting a school in Liberia, April. (Photo supplied) Ireland, invited by current G20 president South Africa as a guest at a series of meetings culminating in November's summit of heads of state, will make education a key point during its participation, its government officials said this week. The G20, a forum of developing and developed countries whose members account for 85% of the global GDP, primarily aims to foster international economic cooperation and address major global economic issues. South Africa's theme during its 2025 presidency is solidarity, equality and sustainability. Ireland is taking the invitation seriously and plans to attend every ministerial meeting held in the run-up to November, officials, including the Irish Minister of State for International Development and Diaspora Neale Richmond, indicated on the sidelines of the Africa Ireland Trade Horzions conference in Dublin. Richmond also confirmed that Ireland — the most educated nation in the world — will push the importance of education and how it can address major global and economic issues. Ireland holds the highest percentage for higher-level education attainment for people aged between 25 and 34 years old at 55.1%, according to data from By contrast, data from Statistics South Africa in 2024 showed that approximately 40% of learners who start grade one in the country drop out before completing their final year of high school. Richmond said having been a poor nation for much of its history, educating its people had contributed to boosting Ireland's economy. 'I don't want to give too much of a history lesson, but it cannot be understated how poor Ireland was. We were a developing country. There's no dispute about that. We had a massive famine, a civil war; we were a new independent state,' he said. 'Our focus on education started in 1967 when the then Irish minister of education made second-level education free. In 1994, third-level education was made free. We now have officially the most educated population in the world and a workforce of 2.8 million people [out of a population of 5 million].' The country is tweaking and tailoring its education system to make sure that it is fit for purpose, he added. 'Over the last decade, we have increased the amount of projects coming out of very specific qualifications in areas relating to the life sciences sector and the tech sector. We work hand in hand with third-level institutions and businesses that want to invest in Ireland.' The life sciences sector — encompassing pharmaceuticals, biotechnology and medical devices — is a major contributor to the Irish economy, generating over €100 billion in exports annually and directly employing over 100 000 people. However, Ireland is facing a housing crisis: 'We need more people working in those areas, not to just construct the houses that we so desperately need, but also the infrastructure, the water, the roads and the healthcare facilities,' he said. Statistics show that Ireland's Richmond reiterated that investing in education was crucial to eradicating poverty. 'When we go to G20, the central plank has to be education' to boost the economy and facilitate development, he said. The journalist's trip to Ireland was sponsored by the Embassy of Ireland in South Africa.
IOL News
10 hours ago
- IOL News
Pension Plain: the hidden costs of withdrawing from your Savings Pot
Explore the significant tax implications of withdrawing from your Savings Pot and understand how these decisions can impact your retirement savings. Image: File picture. During a recent speech, Edward Kieswetter, the Commissioner of the South African Revenue Service (Sars), stated that the total amount of tax collected from retirement fund members who made Savings Pot withdrawals amounted to around R15 billion. Put differently, Sars on average received about R25 of each R100 withdrawn, and members only received R75 or less of their own money. Our collective retirement savings pool has been robbed of R57 billion that will never grow tax-free to provide a future tax-free lump sum benefit or a higher monthly pension amount after retirement. In the whole Two Pots debate, the negative effect that income tax has on early withdrawals from our Savings Pots does not seem to be high on the agenda. As a result, fund members make ill-informed decisions by not taking the tax effect of their withdrawals into account and then complaining about how they were robbed when they received much less than they anticipated. Firstly, any withdrawals from your Savings Pot will immediately reverse part of the tax deduction that you received when you contributed to your fund. If you contributed R3,000 to your fund, of which R1,000 went into your Savings Pot, you received a tax deduction on the full R3,000 contribution to the fund. If you now withdraw R1,000 from your fund, the R1,000 will be taxable at your marginal income tax rate. If your withdrawal is in a different tax year than the year you contributed, you will not be able to replace that contribution and obtain the tax deduction in the same contribution year. If you therefore contribute 27.5% of your income, for example, R90 000, to a fund and get the full tax deduction and you then withdraw the R30,000 that you have in the Savings Pot, you are not allowed to then contribute an additional tax-deductible contribution of R30 000 in addition to the 27.5% to your fund as the Savings Pot withdrawals are not deducted from your contributions made for tax purposes. Secondly, you will reduce the tax-free amount that you can take as a lump sum payment from the Savings Pot of your fund at retirement. Currently, you are allowed to take R550,000 as a tax-free lump sum amount at retirement. If you started to contribute to a fund after September 1, 2024, and you keep on making withdrawals from your Savings Pot, chances are that you will end up having significantly less than R550,000 in your Savings Pot at retirement. Although the tax issue is concerning enough, the fact that you might end up with significantly less money to retire should be your major concern. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ If you started your fund membership after September 1, 2024 and you contribute R10 000 per month (R3 333 going into your Savings Pot and R6 667 going into your Retirement Pot) to your retirement fund for a period of 30 years and you attain an investment return of 10% per annum, you will have about R7 million in your Savings Pot and about R14 million in our Retirement Pot. If you, however, withdraw all the money in your Savings Pot on an annual basis, you will end up having only R44 000 in your Savings Pot that you can take as a tax-free lump sum at retirement. This is significantly less than the R550 000 that you can take as a tax-free lump sum amount at retirement. As fund members, we have a responsibility to take control of our financial education regarding our retirement savings. Without discipline and short-term sacrifice, we will not be able to attain the long-term benefits of saving enough money for a retirement that is free from financial-related stress, even if we try to blame Sars for our ill-informed decisions. * Ladouce is a pension funds lawyer and the author of the book 'Pensions for Palookas'. PERSONAL FINANCE Explore the significant tax implications of withdrawing from your Savings Pot and understand how these decisions can impact your retirement savings. Image: File picture.
IOL News
14 hours ago
- IOL News
Residents learn about multimodal transport benefits in Clairwood meeting
Clairwood residents expressed their views about town planning at a placard protest previously. On Friday, Clairwood residents were informed about how a multimodal transport network and the Cato Ridge inland dry port could help prevent the suburb from becoming a logistics hub. Image: Mthobisi/Nozulela/IOL This week Durban's Clairwood residents were informed about how a multimodal transport network and the Cato Ridge inland dry port could help prevent the suburb from becoming a logistics hub. Warwick Lord, CEO of Cato Ridge Inland Port, gave a presentation to residents in Clairwood on Friday titled: Catalyst for the increased efficiency and sustainability of trade in Sub-Saharan Africa. Desmond D'Sa, coordinator of the South Durban Community Environmental Alliance (SDCEA),called for the meeting. In 2025, the municipality consulted stakeholders on amending the Land Use Scheme in Clairwood to Special Zone 40: Logistics. This aligned with the Local Area Plan (LAP) adopted by the City in 2014. Lord explained that multimodal transport involves using more than one mode of transport to move goods and offers significant benefits, including lower transportation costs, shorter delivery times, and improved reliability. He stated that this will lead to reduced costs, faster deliveries, and more dependable service. 'In Africa, the integration of road, rail, and maritime transport is vital for optimizing supply chains and improving regional connectivity,' he said. Lord added that South Africa acts as a major gateway for trade in Sub-Saharan Africa, with its extensive coastline and advanced port infrastructure. However, he noted that logistical inefficiencies, regulatory challenges, and infrastructural deficits hinder its potential as a regional logistics hub. He emphasized that inland ports are instrumental in developing integrated transport solutions that strengthen logistics corridors, boosting trade competitiveness. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading The country, he said, has well-developed port infrastructure, with major ports handling large cargo volumes. Lord proposed several solutions to strengthen the logistics corridor which includes: - Investment in infrastructure - Development of intermodal facilities - Standardization of processes - Data sharing initiatives - Improved customer services According to Lord, since 9 August 2024 to 3 April 2025, 32 trains have traveled between Durban Port and Cato Ridge, removing approximately 1,408 truck trips from the roads in the past seven months, although December 2024 and January 2025 saw limited volumes. 'The facilities are well-equipped with reach stackers, security generators, and staff. Several local companies are inquiring about capacity and services. We are specifically seeking export clients who can pack goods in Cato Ridge and rail them to the port to ensure balanced loads,' Lord stated. The city's deadline for submissions on the amendment was 8 April 2025. D'Sa described the presentation as excellent and highlighted alternatives that would not involve demolishing residential homes. 'The inland port presentation is an eye-opener and needs political will to be carried through. We did present objections to the city about the rezoning, and we hope we cannot be dictated to and lose our homes. We don't need to build infrastructure such as roads because rail provides a solution," he said.
