Report: One-Sixth of African Aggregate Govt Revenues is Lost to Tax Avoidance

Ugo Aliogo

The United Nations Conference on Trade and Development (UNCTAD) has noted that one-sixth of the continent’s aggregate government revenues derived from corporate tax and 10 percent of that revenue ($6.7 billion) is lost to tax avoidance.

UNCTAD expressed the viewpoint in its Economic Development in Africa Report 2020 on the theme “Tackling Illicit Financial Flow for Sustainable Development in Africa.”

Disclosing this in a statement, the Director General, RDNG African Development Bank Group, Mr. Lamin Barrow, said the report estimated capital flight from Africa at $88.6 billion annually for the period 2013 – 2015 which represent 3.7 percent of Africa’s GDP), whereas total ODA and FDI for the same period stood at $48 billion and $59 billion, respectively. 

He said the report revealed that between 2000 and 2015, the total illicit capital flight from Africa amounted to $836 billion, which is more than Africa’s total external debt estimated at $770 billion, in 2018.

Barrow further explained that Africa is therefore a net creditor to the world, adding that Illicit Financial Flow (IIFFs) represents a major drain on capital and revenues on the continent, undermining productive capacity and prospects for achieving the Sustainable Development Goals (SDGs) and the African Union’s Agenda 2063 Goals.

In a related development, Barrow commended the World Bank, IMF and other partners for their support and commitment on the 18-month executive training on: “Enhancing Accountability, Transparency and Curbing Corruption and Illicit Financial Flows in Africa”, which he noted is the last module before the graduation of the first cohort of the Public Finance Management Academy for Africa (PFMA) Public Finance Management Executive Training Series.

He hinted that the journey that started in March 2022 with the first module on Managing Public Finance in Times of Crisis in Africa is coming to a successful end.

He remarked that the Bank undertakes various training activities through the African Development Institute (ADI) to help build the capacity of officials of Regional Member Countries, adding that the activities include executive training on public finance and debt management under the Public Finance Management Academy for Africa (PFMA), and macroeconomic modelling and forecasting under the Macroeconomic Policy Management Academy for Africa (MEMA). 

He added: “I want to thank our founding partners, namely the World Bank and IMF as well as other institutional partners who have collaborated with us over the period of 18-month for their strong commitment and collaboration in the implementation of the training program of the PFMA capacity development initiative.

“You have worked with us, hand-in-hand, since March 2022 to co-create, and implement the training modules. The same is true for many of the participants, especially those who are graduating in this first cohort in. Despite the challenges of making out time every quarter to attend this 4-day training, you have been steadfast in ensuring regular attendance.

“What is even more insightful is the feedback we received from you after each training module, affirming that the training has been practical and relevant for your day-to-day work in discharging PFM responsibilities in your respective countries.

“It has been a broad partnership effort with diverse actors in this space. Let me also acknowledge the important contributions of the Africa Tax Administration Forum (ATAF); the African Organisation of English-Speaking Supreme Audit Institutions (AFROSAI-E); OECD-Global Forum; Open Government Partnership (OGP); Open Ownership (OO) and the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA).

“I also acknowledge the collaborating Ministries, Departments, and Agencies, including the Ministry of Finance, Ministry of Budget and Planning, Nigeria; the Nigeria Extractive Industries Transparency Initiative; the Corporate Affairs Commission; the Nigeria Financial Intelligence Unit; Ugandan Inspectorate of Government; the Economic and Financial Criminal Pole of Côte d’Ivoire, among others.”