Africa progressing in fight against corruption, illicit financial outflows

By Andualem Sisay Gessesse: Some African countries have been making progress in the fights against corruption, tax fraud and illicit financial outflows over the past few years, says a continental network, which has been sensitizing the continent to take measures against these major obstacles of development.

There are many examples in recent years that shows African countries are getting positive results in their fight against these major development obstacles of the continent, according to Alvin Mosioma Executive Director of Tax Justice Network Africa (TJN-A).

He listed several examples, from the ongoing corruption charges against the former South African President Zuma, to the repatriation commitment of $800 million stolen money of Nigeria from Swiss Bank and the recent court victory of Uganda’s government against an oil company, which generated around $40 million revenues of capital gain tax.

In addition Kenya has also introduced free education in 2014 as a result of the government’s expansion of its tax bases, which resulted in the increase of tax income. Taking the recommendations of Mbeki’s Panel on Illicit financial flows from Africa, Rwanda recently has introduced special unit on mispricing in a n effort to fight the biggest avenue for illicit finance outflows, according to Alvin.

“This shows that African countries are making progress in their fight against tax evasion, corruption and tackling outflow of illicit finance from Africa.” Alvin told New Business Ethiopia reporter in Addis Ababa at the sidelines of African Union’s consultation workshop that focused on how Africa can mobilize domestic resources to sustain its development.

Alvin noted that among the policy recommendations TJN-A suggested during the workshop include, the need for African countries to reform their tax policies by shifting the burden from the poor to the very rich as well as revisiting their tax incentives to investors.

“We are calling upon the African finance ministers to explore ways of reforming the tax policies in the continent that are very regressive and make them more progressive to ensure that the tax burden is not being shifted to the poor. By ensuring that they are taxing the rich more, they can introduce new tax tools such as, capital gain taxes, property taxation, wealth tax that would contribute to reallocating the resources from top to the bottom. Those are some of the key recommendations we are making on domestic resources mobilization for Africa’s development,” he said.

Commenting on the need for reexamining the current tax incentives African countries are providing for foreign investors, he stated that tax incentives are major problems in Africa at the moment. “Equally we are also calling upon the ministers to revisit the issue of tax incentives, which we see as a big problem- where African governments are providing huge tax incentives that are eroding the tax basis,” he said.

In terms of fighting corruption and illicit financial outflow of African money, Alvin stated that it is necessary to look into both the demand and supply side (the corrupt African elites and these who corrupt them).

“We also need to look into how we can deal with the intermediaries that facilitate these practices, such as banks, law ad accounting firms tax heavens as well as the issue of tax avoidance. That is why we are calling on African leaders to expand the definition of corruption,” he said.

TJN-A is a non-profit continental organization engaged in tax and development related issues in the continent for the past several years.

Reports show that amid the success stories in different parts of Africa, there are still a lot to be done to at least minimize the negative impacts of corruption, tax fraud and illicit financial outflows. Experts suggest that beyond the efforts African countries tacking these issues need cross border collaborations and transparent global financial transactions.