Alternative Energy Popular Education Programme)

This paper examines the relationship between extractives and illicit financial flows (IFFs) in order to consider what a review of extractive and tax justice literature anchored in development considerations reveal about possible climate financing possibilities toward a just transition. Minerals necessary for renewed infrastructure development and green energy are extracted by a mining industry which is the biggest driver of profit shifting, constituting 30% in South Africa through trade mis-invoicing and price manipulation at the point of export. Using a systematic review of development, tax justice and extractive industries literature, regional surveys and trade statistics, the paper highlights the scale of base erosion, profit shifting and IFFs from mineral resources with the aim of shedding light on the connection between extractives and climate finance.

Key Findings/Recommendations:

The paper discusses the theoretical underpinnings of IFFs, highlighting corruption at the government level, political economy and underdevelopment, and Afro-decolonial perspectives. The Afro-decolonial perspective links IFFs to the historical exploitation of African resources, portraying it as a continuation of colonial looting. Different methods for categorising and measuring IFFs are presented. These methods aid in understanding the scale and impact of IFFs on national economies. The importance of accurate price valuation of minerals at the point of export to combat trade mis-invoicing is emphasised. The paper recommends stricter regulatory frameworks and cooperation between the South African Revenue Services (SARS) and the International Trade Administration Commission (ITAC) of South Africa ,to ensure accurate reporting and valuation of extractive resources.

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