How to change the illicit outflows narrative

Tax Justice Network Africa will be hosting a virtual capacity building activity for tax justice advocates in Africa

In Summary

• The International Tax Justice Academy is pushing for concerted effort to the problem

• The 7th edition involves civil society, media, trade unions and academia participants 

Kenyan currency
Kenyan currency

With the onslaught of the global coronavirus pandemic, there are concerns that the scale and scope of Illicit Financial Flows (IFFs) could be increasing. While authorities focus on the pandemic, other actors should not be distracted.

Tax Justice Network Africa has embraced innovation to remain on course and will be hosting a virtual capacity building activity for tax justice advocates in Africa. Themed Tax Justice Advocacy: increasing participation of Civil society organisations and journalists through capacity building, the 7th edition of the International Tax Justice Academy brings together participants from the entire continent drawn from the civil society, media, trade unions and academia.

Africa is endowed with significant natural resource wealth, and with good husbandry, could finance its own development. There, however, exist illegal cross-border movement of money and capital that threaten the continent’s sustainable development and have been growing every year. If there has been a growing recognition of the threat that IFFs poses on the continent’s integrity and stability of its financial system in normal times, how about during a pandemic?

Africa is home to the world’s largest arable landmass, second-largest and longest rivers (the Nile and the Congo), and second-largest tropical forest (the Congo basin). According to a study by the African Development Bank Group, the total value added of its fisheries and aquaculture sector alone is estimated at USD 24 billion. In addition, about 30 per cent of all global mineral reserves are found in Africa.

The continent’s proven oil reserves constitute 8 per cent of the world’s stock and those of natural gas amount to 7 per cent. Minerals account for an average of 70 per cent of total African exports and about 28 per cent of gross domestic product. Even with such enormous resources, the continent’s poverty rate stands at 41 per cent, and out of the world’s 28 poorest countries, 27 are in Africa all with a poverty rate above 30 per cent.  

TJNA executive director Alvin Mosioma said, “For African countries to stand on their feet economically and finance their own development, they need to seal the loopholes facilitating outflow of resources, at the same time encourage creative and innovative ways to finance the development agenda. We need to pull on the same side.” 

Undoubtedly, IFFs have turned the continent to a net creditor. During the academy, TJNA endevours to empower the target groups with skills to identify, track and report illicit outflows from the continent. While there is dependence on the academia and research institutions for publication of scientific studies, it is the role of the civil society to advocate for increased transparency around public revenues and expenditures.

The media should invest in improving their skills for in-depth investigations and expose such abuses for action to be taken. Trade unions should take advantage of their presence in every country int he continent and explore possibilities of collaborating with non-state actors to combat IFFs in Africa.

Malawi-based TJNA member Rachel Etter-Phoya said, “African countries achieved independence well over 50 years ago, yet the global financial and tax systems are rigged against their interests. This has severely affected the sovereignty of African nations by undermining domestic revenue mobilisation in Africa that is required for public spending and investment, forcing many governments to borrow and rely on overseas development assistance.

“Revelations like the Panama Papers, Paradise Papers and Luanda Leaks show the role many former imperial powers and their dependencies play in enabling illicit financial flows from the continent. These flows out of the continent and associated revenue losses dwarf finance that flows inward in the form of overseas development assistance, remittances and loans.” 

It is envisaged that beyond the skills development, the academy will birth strengthened alliance of tax justice advocates with enhanced capacities to reduce IFFs and are involved in the tax justice debate.