Upon recognizing the gravity of Illicit Financial Flows (IFFs) as stipulated in the African Union (AU) Anti-IFFs Declaration, six Pan-African Civil Society Organisations (CSOs), namely the Africa Forum and Network on Debt and Development (AFRODAD), Africa Women’s Development and Communication network (FEMNET), International Trade Union Confederation Africa, Africa’s Regional Organisation (ITUC Africa), Pan Africa Lawyers Union (PALU), Tax Justice Network Africa (TJN-A) and Trust Africa (TA), came together in June 2015 and launched the STB Campaign 1.0 (known also as STB 1.0).
The purpose of STB 1.0 was to expand the IFF discourse beyond limited technical experts circles and directly reach large numbers of African citizens, including coordinated and collaborative actions between African CSOs and citizens. This it has contributed to, to a large extent. The campaign transitioned into STB 2.0 and after two successful years the next phase is STB 3.0. The campaign has been and continues to be rooted in African experiences, driven by Pan-African CSOs and reinforced by global African linkages.
The Consortium’s main purpose is to create a framework for collaborative action among leading Pan-African organizations and critical allies to drive STB 3.0. It aims to do this by catalyzing the convening power of multi-disciplinary and intellectual capacities of the STB consortium and other Pan-African CSOs movements through varied advocacy and campaign platforms. Additionally it will be by influencing and challenging created and invited spaces at continental and global levels by promoting African-specific views and content that challenges IFFs from Africa, with a focus on the extractive sector.
In global and continental spaces, IFFs discussions have largely been restricted to criminal activities, with limited spaces to broaden the definition of IFFs.
Under the 2030 United Nations (UN) Sustainable Development Goals (SDGs), curbing IFFs falls under Goal 16 measured by indicator 16.4.1 – total value of inward and outward IFFs in current United States Dollars. However, this is a tier 3 indicator without a set definition, agency or work plan for national governments to prioritise. Without a globally agreed upon IFF definition, there is evidenced caution that this indicator may not be prioritized therefore remaining unattainable.
Key institutions within global and continental spaces – the AU, High Level Panel (HLP) on IFFs, UN Human Rights Council and the UN Financing for Development Office – offered a wider perspective on the definition of IFFs, which includes tax avoidance and tax minimization strategies employed by the economically-rich and Multinational Corporations (MNCs). While this is a good start, more still needs to be done. At a minimum, there is need to establish a coherent continental framework for tackling IFFs; work with African leaders to stop responding uncritically to IFFs with borrowed concepts and solutions largely driven by processes and organizations from Europe and North America (e.g. G8, G20 and Organization for Economic Cooperation and Development) without factoring in the specificities of the African context. All this should be achieved while building and deepening a body of knowledge on the volume and composition of IFFs from Africa.
In 2014, the HLP on IFFs reported that Africa is losing massive financial resources – approximately $50 billion annually – through illicit activities of MNCs and high net individuals. To reinforce this, in 2015, the United Nations Conference on Trade and Development, in its World Investment Report noted that one tax avoidance method cost developing countries $70-120million per year due to IFFs. Therefore, African countries are losing more resources each year than the $132 billion they received in aid in 2015.
A majority of these IFFs happen through tax evasion and avoidance practices by MNCs, particularly those involved in the extractive sector (oil, gas and mining). This “corporate” component of IFFs is estimated to account for about 60% – 65% of all IFFs, with illegal activities accounting for 30% and with about 5% from corruption. Transfer pricing and trade mis-invoicing are some of the biggest means by which MNCs perpetrate IFFs. Multinationals take advantage of their global structure by engaging in intra-group trade and aggressive tax planning and erode the taxable base in African countries where they actually conduct business and make money. At the same time, profits are shifted to low tax jurisdictions where their revenue is maximized. Through trade mis-invoicing, there is evidence of evading tax, avoiding customs duties, transferring kickbacks and laundering money. Moreover, many countries whose economies depend heavily on natural resources, MNCs and other economically powerful interests take advantage of weaknesses in governance in order to obtain an inordinate share of the benefits. In economically poor, remote rural regions where extraction takes place, low-income groups—including indigenous peoples, other minorities, and women and youth in particular—benefit little and bear a disproportionate burden of the social, environmental, and economic costs.
The Consortium recognizes that IFFs in Africa are merely a symptom of a much bigger structural problem of unjust economic and power relations between Africa and the Global North given that such injustices has historically impoverished Africa and enriched them in turn. Therefore, a Consortium-led push to moving beyond transparency in the limited sense of MNCs disclosing what they pay to the state by way of taxes, royalties and other fees and the state declaring these payments in national accounts. This is very much linked to the Extractive Sector Transparency Initiative (EITI). The Consortium is advocating an analysis of what is not paid, and is illicitly siphoned out of the Continent, which is critical to scrutinizing the disproportionate economic power that MNCs hold when it comes to the valuation systems, especially with regards to Africa’s natural resources.
The Consortium is focusing on reducing the undermining of the continent’s ability to mobilize domestic resources, so that economic opportunities may be realized to significantly decrease structural inequality and make room for universal public health and educational resources, transformative and relevant infrastructure, and other vital development priorities. When achieved, Africa will have increased security with more autonomy of its economic resources.
Together, the Consortium is contributing to the deepening and broadening of the conversations by intentionally bringing a diversity of African voices together in the form of women rights organisations, feminist economists, students’ movements, trade unions, faith based organisations and other grassroots social movements to challenge and hold decision makers to account, in terms of curbing IFFs from Africa
The STB Consortium members have extensive experience, relationships and networks build over the last couple of years. Since 2015, the consortium members have collaborated in joint and individual activities to popularize the campaign. They have managed to undertake 30 campaign activities in different African countries including signature collection, street matches, public lectures, online and social media outreach to sensitize citizens on the importance of curbing IFFs. The campaign has been successful so far in that it has raised the profile of IFFs and drawn the attention of policy makers at national and continental levels of governance.
Each member brings to the table key skills and achievements that have contributed to the success of the campaign. For example, (a) TrustAfrica invested in research and knowledge management, including a catalogue of over 30 research papers and a free access online database collating relevant knowledge resources on illicit financial flows out of Africa. This includes research papers, books, chapters, press articles and conference presentations. (b) AFRODAD has contributed to building the capacity of about 100 Members of Parliament on extractive industries’ revenue management, taxation and IFFs (c) PALU supports the PALU Task Force on Combatting IFFs from Africa and participates in the AU-led Consortium on Combatting IFFs from Africa (d) FEMNET hosts the African Feminist Macroeconomic Academy (AFMA) annually; has generated evidence and data on the impact of macroeconomic models of women’s rights in Africa and proposed feminist alternative (e) TJNA hosted the FTI expert meeting where in-country research studies on the Fair Tax monitor were presented and reviewed; and supported litigation processes on the DTA between Kenya and Mauritius.
The STB Consortium members promote diversity, equity and inclusion in their organisations. These are ensured through key organisational policies. The organisations are strongly committed to treating their employees with respect and dignity and do not discriminate on the basis of race, nationality, ethnicity, gender, sexual orientation, HIV status or religious affiliation. Staff from the six organisations are representative of the diversity in Africa by race, religion and gender.
The following nationalities are represented in the six organisations – Tanzanian, Kenyan, Kenyan/Italian, Senegalese, Gambian, Zimbabwean, Nigerian, Ugandan, Mauritanian, Cameroonian, Nigerian/French, Rwandan/Swiss, Canadian. The organisations are multi-religious including Muslims, Christians, Agnostic and Atheist. From a quick survey, the six organisations have a 50-50-gender representation for staff and board members.
STB 3.0 will focus on: (1) research and policy innovations at the continental level in terms of Tax and the International Financial Architecture, Tax and Extractives, Tax and Inequality, Tax and Investments; (2) mobilising larger continental constituencies to address lessons drawn and explored from emblematic cases of IFFs from Africa, for purposes of strategic policy discussions. The Consortium’s operational elements are trifold: governance mechanism, communications and financing strategies (all of which are annexed in this narrative).
For the next 10 years, the campaign aims to maximize Africa’s benefit from her wealth by contributing to advocacy that curbs IFFs and strengthens institutions required to take a lead on this.
The STB campaign has a Pan African grounding and identity, which provides legitimacy to speak on issues affecting the continent. It is holistic in its methodology as it brings together six consortium partners with multi-dimensional competencies, intersectional experiences and approaches to economic justice for Africa. These intersectional experiences and competencies include but are not limited to: A Pan African feminist analysis, labour, debt and development, tax, legal and human rights, fund management and movement building. These members have shared values; pan Africanism, justice, human rights, equity, gender justice, diversity and inclusivity – which guides interactions with each other as well as other national, regional and continental CSOs.
Download Campaign Materials Flyers, Public Announcement, Partners Announcement.