• By Adeola Yusuf
Eighty billion dollars is being moved out of Nigeria and other countries in Africa in just one year, the Tax Justice Network Africa (TJNA) has disclosed. The anti-Illicit Financial Flows group, which stated this in a document sighted by New Telegraph, said that it had been vindicated by the leaks from Paradise Papers. It ranked Nigeria number four, after Angola, Democratic Republic of Congo, Kenya, as culprits of Illicit Financial Flows (IFFs) in Africa.
The group recalled : “Last week the International Consortium of Investigative Journalists unleashed yet another expose, further uncovering the intrigues in the global financial system
The revelations dubbed the “Paradise Papers,” comprise of millions of files detailing offshore holdings of political leaders (and their financiers) as well as big-time companies that cut back on the amount of taxes that they pay through transactions conducted in secret.
” According to the document, the Paradise Papers point at six powerful politicians and businesspersons from Africa; in Angola, Democratic Republic of Congo, Kenya, Nigeria, Zambia, Uganda, who have taken advantage of the legal loopholes in their respective tax regimes to acquire and move wealth from their own home countries to offshore tax havens in order to limit their liability to the tax authorities.
A high-power committee headed by former President of South Africa, Thabo Mbeki, had two years ago, said that Africa lost a whooping $60 billion to Illicit Financial Flows.
“Africa loses approximately USD 80 billion annually through the movement of funds from Africa to offshore tax havens, through what are often termed as ‘legal’ means. “Furthermore, the Paradise Papers vindicates the findings of the High Level Panel on IFFs on harmful business practices that undermine the integrity of institutions, laws, and policies aimed at improving tax revenue collection in Africa,” the TJNA document stated
The actions of such individuals and businesses according to the group, deny African governments much needed tax revenue that can be used to finance economic and social development on the continent. “The impact of this is that African governments are compelled to implement regressive taxes in a bid to close the tax revenue gap,” TJNA said. “Secondly, the Paradise Papers implicitly show how developing countries are engaging in harmful tax competition that may lead to a race to the bottom and stifle tax revenue collection for African governments.
“The Paradise Papers comes at an opportune time in Africa where recent revelations show the complicit actions of big accountancy firms enabling wealthy elites and politicians to siphon off billions of dollars from Africa to offshore tax havens. “The Paradise Papers further illustrate TJNA’s long term view of the fractured global financial system that disproportionately impacts the poor on the continent.
” Besides, the group said these revelations add to the catalogue of evidence that demonstrates illicit financial flows as well as aggressive tax planning as being a global problem and not just an African problem. “It is time for an overhaul of the global financial system under the auspices of the United Nations to ensure developing country voices are heard,” said TJNA Deputy Executive Director, Jason Rosario Braganza from the sidelines of the 4th International Tax Justice Academy in Entebbe.
“TJNA continues to advocate against IFFs from Africa and will push forward with its call for a broader definition of capital outflows that includes actions such aggressive and willful tax avoidance by individuals and businesses given the pervasive impact it has in Africa. The Network further calls upon African governments to honour their commitments made to fight IFFs by implementing the recommendations of the High Level Report on IFFs.