The African Forum and Network on Debt and Development (AFRODAD), a Pan African organisation born of a desire to secure lasting solutions to Africa’s debt and development challenges, hails the adoption of the new report from the African Union (AU) and United Nations Economic Commission for Africa (UNECA) High Level Panel (HLP) on Illicit Financial Flows (IFFs) from Africa chaired by former South African President Thabo Mbeki. Despite the report being overdue, AFRODAD supports this positive step towards curbing resource leaks which have negatively affected the development trajectory of the African continent. It is now time for the African Union to go beyond the surface of this report and implement mechanisms that will deal with this problem in a decisive manner.
The report’s figure of more than US$50 billion being lost annually through IFFs support the findings of the report, “Honest Accounts? The True Story of Africa’s Billion Dollar Losses,” written by AFRODAD and its partners that included; Health Poverty Action, Jubilee Debt Campaign, Tax Justice Network, among others, with support from the European Union.In that report AFRODAD concluded that Africa is being drained of resources to the tune of US$192 billion which pales in comparison to the US$134 billion that flows into the continent each year in the form of loans, foreign investment and aid. AFRODAD is also concerned that the extractive sector is the most affected by IFFs through transfer mispricing, secret and poorly negotiated mining contracts.
The above figures are disturbing to a continent endowed with natural resources yet 46.8% of its people in Sub-Saharan Africa live on less than US$1.25 a day. In order or the AU to realize the objectives of the Agenda 2063 it needs optimize use of Africa’s resources for the benefit of all Africans. AFRODAD believes that if the AU closed the tax loopholes and stopped giving generous incentives to foreign companies, it will not only mobilize resources that could be used to pay off some of Africa’s debt burden but accelerate the realization of the aspirations of the people of Africa as expressed in the vision of Agenda 2063 of “An integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena.”
AFRODAD is calling on the AU to among other things:
- Urgently set up an organ on IFFs charged with implementing six recommendations outlined in the HLP report.
- African countries should heed the recommendation of the report and put in place clear and concise laws and regulations that make it illegal to intentionally incorrectly or inaccurately state the price, quantity, quality or other aspect of trade in goods and services in order to move capital or profits to another jurisdiction or to manipulate, evade or avoid any form of taxation, including customs and excise duties.
- AFRODAD supports the creation of an international treaty on transfer pricing so as to enhance transparency on global tax administration. The treaty must make it mandatory for Multi-National Corporations (MNCs) to provide all relevant governments with information on their global allocation of revenue, economic activity and taxes paid among countries according to a common template.
- AFRODAD agrees with the suggestion that this treaty should be supervised by the AU and UN as they are best placed to ensure that recommendations from HLP report are implemented.
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