By Mark Kapchanga
Dr Donald Kaberuka, President of the African Development Bank Group. PHOTO: FILE/STANDARD]
African countries are being urged to spearhead ambitious tax reforms that would tame the rising tax evasion cases in the continent .
African Development Bank (AfDB) observes that the new tax measure should be based on the widening of the tax base, to ensure fairness and greater compliance.
“The potential for further tax reform and rationalisation, through broadening the direct tax base and reducing the range of indirect taxes, will help to reduce the size of the underground economy, curtail illicit capital outflows, and improve overall governance,” said Donald Kaberuka, the president of the AfDB.
He argues that were it not for illicit financial flows, “Africa would be in a position to finance the bulk of its development needs from its own resources, with external financing as a merely complementary source”.
Kaberuka has, however, cautioned that as long as the continent continues to witness illicit resource transfers, domestic financing for development would continue to be seriously inadequate.
A report published by the Tunis-based Bank and the Global Financial Integrity, a research and advocacy organisation working to curtail illicit financial flows out of developing countries, says that over three decades, the haemorrhage of resources from Africa was about four times Africa’s current and almost equivalent to Africa’s current Gross Domestic Product (GDP).
The report further shows that between 1980 and 2009, Sub-Saharan Africa lost about $108 billion (Sh9.2 trillion) more in resources than North Africa did over the same period.
However, in the most recent decade, North Africa lost some $50 billion (Sh4.3 trillion) more than Sub-Saharan Africa.
Within Sub-Saharan Africa, West and Central Africa lost the most resources on a net basis over the 30-year period, about $246.7 billion (Sh21 trillion), followed by Southern Africa $241.3 billion (Sh20.5 trillion).
The heavily indebted poor countries as a whole received net resources from the world to the tune of $185.2 billion (Sh15.7 trillion) over the same period.
Global Financial Integrity Director Raymond Baker says the resources lost, if harnessed, could plug the financing deficit that afflicts the continent .
youthful populations
He added that it would enable countries to extend their infrastructure, create employment for their growing youthful populations and safeguard their natural resource revenues. “We should accord efforts to address the proliferation of illicit financial flows from Africa as much importance as we are putting on domestic resource mobilisation and the attraction of foreign direct investment,” said Baker.
According to the report, illicit outflows were dominated by outflows from West and Central Africa.
Illicit outflows from these regions outstripped those from North Africa by over two times in nominal terms.
In real terms, three African regions – West and Central Africa at $494 billion (37 per cent), North Africa at $415.6 billion (31 per cent) and Southern Africa at $370.0 billion (27 per cent) – account for 95 per cent of total cumulative illicit outflows from Africa over the three decades.
In terms of volume, Nigeria, Egypt, and South Africa led the regional outflows. In West and Central Africa, outflows were largely driven by Nigeria, Democratic Republic of Congo and Cote d’Ivoire in that order of magnitude while North Africa outflows were dominated by Egypt, Algeria, and Libya respectively.
Outflows from Southern Africa were mainly driven by South Africa, Mauritius and Angola.
Dr Donald Kaberuka, President of the African Development Bank Group. PHOTO: FILE/STANDARD]
African countries are being urged to spearhead ambitious tax reforms that would tame the rising tax evasion cases in the continent .
African Development Bank (AfDB) observes that the new tax measure should be based on the widening of the tax base, to ensure fairness and greater compliance.
“The potential for further tax reform and rationalisation, through broadening the direct tax base and reducing the range of indirect taxes, will help to reduce the size of the underground economy, curtail illicit capital outflows, and improve overall governance,” said Donald Kaberuka, the president of the AfDB.
He argues that were it not for illicit financial flows, “Africa would be in a position to finance the bulk of its development needs from its own resources, with external financing as a merely complementary source”.
Kaberuka has, however, cautioned that as long as the continent continues to witness illicit resource transfers, domestic financing for development would continue to be seriously inadequate.
A report published by the Tunis-based Bank and the Global Financial Integrity, a research and advocacy organisation working to curtail illicit financial flows out of developing countries, says that over three decades, the haemorrhage of resources from Africa was about four times Africa’s current and almost equivalent to Africa’s current Gross Domestic Product (GDP).
The report further shows that between 1980 and 2009, Sub-Saharan Africa lost about $108 billion (Sh9.2 trillion) more in resources than North Africa did over the same period.
However, in the most recent decade, North Africa lost some $50 billion (Sh4.3 trillion) more than Sub-Saharan Africa.
Within Sub-Saharan Africa, West and Central Africa lost the most resources on a net basis over the 30-year period, about $246.7 billion (Sh21 trillion), followed by Southern Africa $241.3 billion (Sh20.5 trillion).
The heavily indebted poor countries as a whole received net resources from the world to the tune of $185.2 billion (Sh15.7 trillion) over the same period.
Global Financial Integrity Director Raymond Baker says the resources lost, if harnessed, could plug the financing deficit that afflicts the continent .
youthful populations
He added that it would enable countries to extend their infrastructure, create employment for their growing youthful populations and safeguard their natural resource revenues. “We should accord efforts to address the proliferation of illicit financial flows from Africa as much importance as we are putting on domestic resource mobilisation and the attraction of foreign direct investment,” said Baker.
According to the report, illicit outflows were dominated by outflows from West and Central Africa.
Illicit outflows from these regions outstripped those from North Africa by over two times in nominal terms.
In real terms, three African regions – West and Central Africa at $494 billion (37 per cent), North Africa at $415.6 billion (31 per cent) and Southern Africa at $370.0 billion (27 per cent) – account for 95 per cent of total cumulative illicit outflows from Africa over the three decades.
In terms of volume, Nigeria, Egypt, and South Africa led the regional outflows. In West and Central Africa, outflows were largely driven by Nigeria, Democratic Republic of Congo and Cote d’Ivoire in that order of magnitude while North Africa outflows were dominated by Egypt, Algeria, and Libya respectively.
Outflows from Southern Africa were mainly driven by South Africa, Mauritius and Angola.
