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By Mukasiri Sibanda, Tax & Natural Resource Governance Advisor at Tax Justice Network Africa (TJNA)
Beyond any reasonable doubt, the Covid-19 pandemic has significantly negatively contributed to illicit financial flows (IFFs) out of Africa. IFFs are broadly defined as any financial resources illegally earned, moved, spent, or stashed across the borders with the intention of hiding income or wealth from taxpayers or anti-corruption agencies. The estimated annual losses from IFFs in Africa has ballooned to $88.6 billion according to the 2020 report entitled ‘Tackling Illicit Financial Flows for Sustainable Development in Africa’ by United Nations Conference on Trade and Development (UNCTAD) in 2020. Worse still, Covid-19 has further stretched the finance gap for basic services like health and education that suffered from pre-existing conditions of being underfunded. Millions in Africa have been pushed further into extreme poverty and the number of expected job losses is equally shocking as fundamental sources of livelihood in Africa are currently paralysed by lockdowns. Further to this, Africa is at the tail end of getting vaccines because it cannot afford to compete with rich countries and there are no meaningful resources to invest in social safety nets.
Citing the biblical adage, ‘give us this day our daily bread,’ it is imperative that Africa stops the syphoning of the continent’s resources to cushion itself against the Covid-19 pandemic. This dire situation calls for stakeholders to reflect on their role in fighting the scourge of IFFs out of Africa.
Appreciating this responsibility’s weight, civil society members in Africa agreed to relaunch the Stop The Bleeding (STB) campaign on the 8th of February 2021 during the weeklong 12th edition of the Alternative Mining Indaba (AMI) themed ‘the AMI revolution will never be muted!’
STB campaign is propelled by “… the strong belief in the voices of mobilized students, trade unions, faith-based organisations and other grassroots social movements to urge decision makers to stop the bleeding of Africa’s resources through illicit outflows.”
There was a diverse and rich panel to assist with the turbocharging of the STB campaign. The panellists comprised of the executive secretary for African Tax Administration Forum (ATAF), Logan Wort, ranked the top 50 most influential figures in Tax, and Extractive Industry Transparency Initiative’s (EITI) Director, Disclosure and Civil Society Engagement, Lyydia Kilipi. Youth voices were incorporated via the delivery of a podcast and a poem, delivered by Gathoni Ireri and Samantha Dube.
Kenya’s Black Gold by Gathoni Ireri
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STB poem by Samantha Dube
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OXFAM International’s lead on extractives in Southern Africa, Titus Gwemende, and the leadership of the steering committee – Tax Justice Network Africa (TJNA), African Coalition on Debt and Development (AFRODAD), The African Women’s Development and Communication Network (FEMNET), TrustAfrica, Pan African Lawyers Union (PALU), and The African Regional Organisation of the International Trade Union Confederation (ICTU-Africa) were also part of the panel. This diverse group of stakeholders highlighted the following key points during the meeting.
Firstly, the frontier for curbing IFFs has shifted. It is no longer about statistics, analysis and awareness-raising. The emphasis now lies with tracking and recovering lost revenue from IFFs. Indeed, if the STB campaign can contribute to the recovery of resources, then politicians will pay attention and therein would lie the success story. To do so, ATAF is currently working with 8 African countries to recover billions lost through IFFs. Tracking and recovery of lost money, is therefore, no longer a pipe dream.
Secondly, to galvanise the STB campaign, civil society organisations must eliminate the skills deficit within their ranks. The fight against IFFs requires broader skill sets than political scientists, lawyers, economists, and accountants. The STB campaign must also include geologists, metallurgists, and IT specialists.
Another critical success factor in curbing IFFs is the need to influence learning institutions in Africa. The meeting noted that academia must be deliberately targeted and be well-equipped to have a textured understanding of IFFs. The current trend where specialists from the West and East are the ones supporting policymakers in Africa must be reversed.
It is high time that the STB campaign undertake an assessment of international treaties and developments within the global rules on taxation and IFFs to see where Africa is and what is missing. The meeting noted that African governments must be concerned with these issues including the global conversation on review of the current tax rules.
Further, the watchdog role of the STB campaign must come into play to ensure that Africa’s interest, long side-lined, is catered for in the global tax reforms discussions and decisions. As it stands, multinational enterprises (MNEs) shift at least 40% of their profits to tax havens and the bulk of the losses to IFFs are attributed to transfer mispricing. Global taxation rules, currently as they are, are skewed against the interest of capital importing countries and Africa is that bracket.
EITI also added its weight to the relaunch of STB campaign by strongly emphasising that the framework has expanded its initial remit. And expanded scope provided essential levers for the STB campaign. The focus is no longer on reconciling what was paid by extractive companies and what was received by government. Instead, the framework is now asking whether what was paid is the right and fair amount and what amount of revenue is missing that could help finance better health, education, and public infrastructure that people rely on. This too is another area that the STB campaign could tap into. With half of the EITI implementing countries located in Africa, the STB campaign could engage with the EITI framework in both implementing and non-implementing countries.
Specific areas for the STB campaign to leverage under EITI include advocating for a public registry on beneficial ownership (BO), contract disclosure, energy transitioning and multi-stakeholder engagement platforms. Knowing the real persons’ identities benefiting from natural resources would be a game-changer in the fight against corruption and IFFs risks in the extractive sector. Ms Kilip explained that all EITI implementing countries are compelled to publicly disclose contracts as well as a public registry on BO in oil, gas, and mineral sectors and in the era of shrinking civic space, EITI’s multi-stakeholder engagement platforms at country level offer good room for STB campaign to advance its mission.
The urgency of curbing IFFs out of Africa must not be looked at in futuristic terms. Recovery of stolen resources must start now. the STB campaign has an important role to play in achieving the recovery of asset goal must do this differently. Indeed, the STB campaign’s relaunch reiterated the theme of the AMI: the AMI revolution must not be muted.