Illicit Financial Flows (IFFs): A burden to Tanzania National Budget

Illicit Financial Flows (IFFs) represent a significant challenge to Tanzania’s economic stability, depriving the country of substantial revenue that could support critical sectors such as agriculture. This policy brief examines the impact of IFFs on Tanzania’s national budget, focusing on the agriculture sector. It highlights how funds lost through IFFs could bridge the agriculture budget deficit and provides key recommendations to address the issue.

Illicit Financial Flows (IFFs) refer to the movement of money or resources across country borders that are illegally earned, transferred, or used. IFFs occur in various forms emanating from commercial and criminal activities. This includes, but is not limited to tax evasion, tax avoidance, trade mispricing, transfer pricing abuse, corruption, capital flight, drug trafficking, human trafficking, smuggling, arms trade and money laundering. These flows drain essential resources from governments, reducing funds needed to support key sectors such as education, health, and agriculture, which disproportionately affect marginalised groups in developing countries like Tanzania.