Tag Archives: Illicit Outflows

Zambia has continued to record massive revenue losses – AFRODAD

13 Aug

ZAMBIA has continued to record massive losses in revenue due to the dubious manner in which mining and other sources of national revenue are being managed, AFRODAD has observed.

In an interview in Gaborone, Botswana, during a seminar on Illicit Financial Flows in Africa and their negative impact on development, African Forum and Network on Debt and Development (AFRODAD) economic governance policy officer, Tafadzwa Chikumbu, said due to the secrecy that surrounds agreements with multinational companies on mineral extraction, Zambia was losing huge sums of money through illicit financial flows.

“Mineral extraction has placed Zambia at a very precarious situation because the bulk of illicit financial flows come from commercial activities which are either transfer mispricing or trade misinvoicing by multinational corporations. The secrecy around the contracts awarded to mining companies expose Zambia in such a way that it loses more money in the region just like South Africa, Congo DR and Angola,” he said.

Chikumbu said the danger of losing more money through such flows had persisted in Zambia and the country would continue grappling with challenges of getting meaningful revenue from such operations if nothing was done to abate the situation.

He said if Zambia was able to collect enough resources, the country could have been in a position to finance education, health, infrastructure development and reduce the gap between the rich and the poor by simply giving social protection to the majority of the poor people.

“Discussions of illicit financial flows should not remain a technical issue because they affect the lives of ordinary people, the poor. We should always relate the implications of such illegal acts on the lives of the majority poor. Efforts, however, have been made by Zambia to try and mitigate the problem by implementing Extractive Industry Transparency Initiative. Although it’s yet to be implemented in a robust way, the country has taken a very positive development to move towards transparency and accountability in the mining sector,” Chikumbu said.

He said illicit financial flows were a problem for Zambia and considering the fact that the money that moves out of the country ends up in another jurisdiction, probably in the global north, there was need for cooperation between the government and countries where the money was going.

Chikumbu said the disclosure of beneficial owners who have corporate offshore accounts was critical in abating the problem.

SOURCE: http://www.postzambia.com/news.php?id=10498#sthash.flx0BylC.dpuf


Donations from West mask ‘US$60bn looting’ of Africa

12 Aug

illicit2WESTERN countries are using aid to Africa as a smokescreen to hide the “sustained looting” of the continent as it loses nearly US$60 billion a year through tax evasion, climate change mitigation, and the flight of profits earned by foreign multinational companies, a group of NGOs has claimed.Although sub-Saharan Africa receives US$134 billion each year in loans, foreign investment and development aid, research released last week by a group of UK and Africa-based NGOs suggests that US$192 billion leaves the region, leaving a US$58 billion shortfall.

The report says that while Western countries send about US$30 billion in development aid to Africa every year, more than six times that amount leaves the continent, “mainly to the same countries providing that aid”.

The perception that such aid is helping African countries “has facilitated a perverse reality in which the UK and other wealthy governments celebrate their generosity whilst simultaneously assisting their companies to drain Africa’s resources”, the report claims.

It points out that foreign multinational companies siphon US$46 billion out of sub-Saharan Africa each year, while US$35 billion is moved from Africa into tax havens around the world annually.

The study, which also notes that African governments spend US$21 billion a year on debt repayments, calls for the aid system to be overhauled and made more open.

It says aid sent in the form of loans serves only to contribute to the continent’s debt crisis, and recommends that donors should use transparent contracts to ensure development assistance grants can be properly scrutinised by the recipient country’s parliament.

“The common understanding is that the UK ‘helps’ Africa through aid, but in reality this serves as a smokescreen for the billions taken out,” said Martin Drewry, director of Health Poverty Action, one of the NGOs behind the report.

“Let’s use more accurate language. It’s sustained looting – the opposite of generous giving – and we should recognise that the City of London is at the heart of the global financial system that facilitates this.”

Research by Global Financial Integrity shows Africa’s illicit outflows were nearly 50 percent higher than the average for the global south from 2002-11. The UK-based NGO ActionAid issued a report last year that claimed half of large corporate investment in the global south transited through a tax haven.

Supporting regulatory reforms would empower African governments “to control the operations of investing foreign companies”, the report says, adding: “Countries must support efforts under way in the United Nations to draw up a binding international agreement on transnational corporations to protect human rights.”

But NGOs must also change, according to Drewry: “We need to move beyond our focus on aid levels and communicate the bigger truth – exposing the real relationship between rich and poor, and holding leaders to account.”

The report was authored by 13 UK and Africa-based NGOs, including: Health Poverty Action, Jubilee Debt Campaign, World Development Movement, African Forum and Network on Debt and Development, Friends of the Earth Africa, Tax Justice Network, War on Want, Medact, Friends of the Earth South Africa, JA!Justiça Ambiental/Friends of the Earth Mozambique.

Sarah-Jayne Clifton, director of Jubilee Debt Campaign, said: “Tackling inequality between Africa and the rest of the world means tackling the root causes of its debt dependency, its loss of government revenue by tax dodging, and the other ways the continent is being plundered.

“Here in the UK we can start with our role as a major global financial centre and network of tax havens, complicit in siphoning money out of Africa.”

A UK government spokesman said: “The UK put tax and transparency at the heart of our G8 presidency last year and we are actively working with the Organisation for Economic Co-operation and Development to ensure companies are paying the tax they should and helping developing countries collect the tax they are owed.” – The Guardian.

SOURCES: http://www.herald.co.zw/donations-from-west-mask-us60bn-looting-of-africa/



Zimbabwean government urged to improve taxation systems

18 Feb

ImageThe Zimbabwe Coalition on Debt and Development (ZIMCODD) on Wednesday held a workshop at the Jameson hotel, Harare aimed at sensitizing media on issues to do with Debt, extractives and illicit outflows.

Speaking at the workshop ZIMCODD director Ms Patricia Kasiamhuru spoke on the need to provide capacity information to enable effective reporting. Illicit outflows generally refers to, illegally earned, transferred or spent money, in the extractive sector it involves tax evasions, corruption and illegal exploitation.

Tafadzwa Chikumbu of the African Forum and Network on Debt and Development (AFRODAD) highlighted effects of illegal illicit outflows on a country’s economy, stating that Africa loses about $50 billion in illicit financial outflows while Zimbabwe lost $12 billion over the last 3 decades.

Illicit financial flows stifle socio-economic progress examples can be pointed on the failure by some African countries to finance Millenium Development Goals leading to unsuccessful implementation of these vital causes in societies. Illicit financial flows also promotes corruption and bribery thereby increasing gain for a few and distorting funds which would have been used for poverty alleviation at the expense of ordinary Citizens, it also aggravates foreign debt leading to stagnation in progress as an economy fails to flourish.

Mr Chikumbu spoke on the need for government to ensure fiscal transparency, push for the criminalisation of tax evasions which is rampant in the informal sector, however he pointed out that “untouchable multinational cooperations “, as well as complicity of government position at times make it difficult to fully curb illicit financial flows.

Gilbert Makore of the Zimbabwe Environmental Lawyers association (ZELA ) spoke on challenges and effectiveness of the current resource mobilisation in Zimbabwe’s taxation system citing need to broaden existing tax base, increase diamond resource mobilisation and improve on transparency and accountability as a means to monitor revenue.

Media was urged to play its role in exposing issues of corruption and mishandling of taxes in order to bring justice.

Media was called upon to be factual urging research of all angles so as to be true to the public with dogmatism attributed as the greatest challenge in media.

Zimbabwe Network against illicit outflows (ZINAIF ) called upon journalists to append their signatures as a way of supporting their cause.

SOURCE: http://newsofthesouth.com/finance-mishandling-a-cause-for-concern-for-zim/

Zimbabwe Network Against Illicit Outflows (ZINAIF) Launched

25 Nov

zinaifThe 20th of November 2013 saw the launch of the Zimbabwe Network Against Illicit Flows (ZINAIF), a coalition which is the brainchild of Zimbabwe Coalition on Debt and Development (ZIMCODD), African Forum and Network on Debt and Development (AFRODAD), Zimbabwe Environmental Law Association (ZELA), Transparency International Zimbabwe (TIZ) and the Centre for Natural Resource Governance (CNRG).

The main objective of the coalition, is to find drivers, causes and impact of illicit outflows from Zimbabwe.