Pan-Africanists want Kagame to lead war against illicit financial flows
The Pan-African workers regional organisation of the International Trade Union Confederation (ITUC-Africa) has written an open letter to President Paul Kagame petitioning him to lead his counterparts in a new campaign to end Illicit Financial Flows (IFFs) that cost Africa US$50 billion a year.
The Togolese based ITUC-Africa has a membership of over 17 million people working in the private, public as well as informal sectors of 49 African countries; its aim is to work towards the actualisation of the development potentials of Africa and Africans.
On Thursday in Nairobi, civil society organisations led by Tax Justice Network-Africa, launched a campaign against IFFs resulting mainly from tax evasion and other commercial malpractices by multinationals operating in Africa.
The leaders of the ITUC-Africa and the Pan-African Parliament who attended the launch of the campaign in Nairobi, committed to lobby African governments to pass policies that close the gaps through which multinationals are ‘bleeding’ the continent of colossal sums of money.
Joel Akhator Odigie, ITUC-Africa’s Coordinator for Human and Trade Rights told Sunday Times that Kagame’s excellent governance track record in Rwanda is what the continent needs to stop ‘bleeding Africa’ through economic plundering.
“There’s a vacancy to lead Africa and we believe President Kagame is one of the contenders given his track record and strong belief in the potential of Africans to shape their destiny,” said Odigie.
President Paul Kagame has become a leading advocate of a truly free and economically independent Africa with its people able to make decisions to shape their own countries’ destinies.
The President has the same vision for Rwanda whose long term objective is to break the vicious cycle of dependency on external aid to finance the country’s development.
It has been a gradual journey from 1995 when the Rwanda’s domestic resources financed only 29 percent of the national budget compared to today’s 66 percent.
Although African countries have been independent for over half a century now, many of them remain economically dependent on their former colonial masters something that has undermined their capacity to act as sovereign states albeit having enough resources.
A recent high level panel commissioned by the African Union and chaired by former South African President Thabo Mbeki with support from the Economic Commission for Africa (ECA), found that Africa lost US$1 trillion between 1980 and 2008.
The Mbeki report which has since been adopted by the AU said the money was shipped out of the continent through mainly malpractices by the huge multinational companies operating in Africa’s extractive sectors such as mining, oil and gas.
“IFFs from Africa in real terms mean loss of jobs, income, decent education, health facilities and other basic infrastructure critical to structurally transform the economy of countries in Africa and the socio-economic conditions of Africans,” Mbeki’s report observed.
Mbeki’s high level report recommended at least fifteen solutions that African countries must implement to curtail IFFs from the continent, they include revising countries’ tax incentive policies to investors as well as reviewing mining and exploration agreements.
However, the matter requires strong political will of governments given that many countries are in a race to attract as much foreign direct investment to their countries as possible; the result of this race has been what experts call ‘overly generous incentives’ to entice investors.
To steer a move towards implementing Mbeki and the group’s recommendations, an interim working group of the African IFF campaign comprising of six Pan-African organisations was established.
It includes the Tax Justice Network-Africa, Third World Network-Africa, Africa Forum and Network on Debt and Development, the African Women’s Development and Communication Network, ITUC-Africa and Trust Africa supported and joined by the Global Alliance for Tax Justice.
On Friday in Nairobi these organisations launched a unified African campaign platform on IFFs which they dubbed “stop the bleeding.’
“The main goal of the campaign is to implement a one Africa Campaign on IFFs that is led and driven by African civil society organisations with support from other partners including international non-governmental organisations,” said TJN-Africa Director Alvin Mosioma.
Although Africa’s civil society groups are placing themselves at the vanguard of the fight against IFFs, they also know that they will need the full support of African governments which have the mandate to pass the required policies.
By petitioning President Kagame, the civil society groups also want to have a respected head of government that can inspire other heads of African governments to do what it takes to implement the recommendations in Mbeki’s report.
In the open letter to President Kagame signed by Kwasi Adu-Amankwah, the General Secretary ITUC-Africa, Rwanda is praised and asked to take the lead in stopping IFFs because the country has already undertaken a review of its tax treaties in ways that are delivering revenue benefits to government.
For instance in April 2013, Rwanda signed a new Double Taxation Agreement (DTA) with Mauritius which replaced a flawed arrangement that had been signed in 2001; the new agreement came into force in August last year.
Under the new DTA agreement, Rwanda introduced a 10 percent tax on items that were previously exempted such as tax on company dividends, interests and royalties.
The newly launched campaign aims at getting countries to do more than what Rwanda did in 2013 and to almost overhaul their entire taxation policies as well as revise existing investment incentives to eliminate costly concessions such as tax holidays.
It’s not clear whether countries will risk their international investment outlook by tearing down policies that they believe would attract FDI; however, the argument by civil society groups is in form of a question; what’s the point of investment that doesn’t benefit Africans?
According to Angel Gurría, Secretary-General of the OECD, the amount of money lost by Africa is IFFs is equivalent to three times the amount of official development assistance that the continent receives in form of aid.
To make more sense of these figures in order to capture people’s imaginations and attention, to stop the bleeding, campaigners intend to attach real value to the numbers and show governments what exactly they are losing in real terms.
For instance, the African Development Bank says Africa needs US$93 billion annually for infrastructure, only US$51 billion is available leaving a deficit of about US$42 billion, a gap which the US$50 billion lost annually in IFFs is enough to fill.
Also, activists say the US$50 billion is enough to build 151,000 modern boarding schools on the continent, which translates into at least 2,800 schools for each country.
The money is also enough to reportedly build 500 modern hospitals, according to the sponsors of the stop Africa from bleeding campaign.
“We will never be truly independent until we end economic dependency on our former colonial masters; Africa is rich but our people remain poor because of activities such as tax evasion,” said Khanyisile Litchfield-Tshabala, chairperson of the Pan-African Members of Parliament network on IFFs and tax.