Africa shows significant progress on tax transparency

AFRICAN countries strengthened their ability to recover funds held offshore, directly boosting national tax revenues, according to the latest Tax Transparency in Africa report. The trend signals continuing progress in the fight against illicit fund flows out of Africa, worth an estimated US$50 billion each year.

A recent report provides comparable tax transparency statistics to aid decision-makers to address illicit fund flows. Thirty-four countries completed the survey for the 2021 edition, including six non-members of the Global Forum: Angola, Democratic Republic of Congo, Sierra Leone, Gambia, Zambia and Zimbabwe.

It noted progress on two core tax transparency pillars: political awareness and commitment, and capacity to advance tax transparency and the exchange of information.

Publication of the report is a timely contribution to the dialogue on tax transparency in Africa as it highlights the progress made by African countries in benefiting from the global improvements in tax transparency in their domestic resource mobilisation effort.

In spite of disruptions caused by the COVID-19 crisis, there have been advances in transparency. Mali joined the Global Forum, bringing to 32 the number of African members. Eswatini became a signatory to the Yaoundé Declaration on fighting illicit financial flows in Africa, joining 29 other African countries plus the African Union Commission. In 2020, African countries for the first time sent more exchange of information requests than they received.

Fighting these illicit transactions is at the heart of the partnership between the African Development Bank and the Global Forum.

Co-operation extends beyond production of the report to bank operations, such as the resource mobilisation and reform effectiveness support programme in Senegal.

These issues received special focus in the bank’s recently approved strategy for economic governance in Africa, which outlines the priorities for the bank’s governance work on the continent over the coming five years.

Tax transparency in Africa highlights the importance of international tax co-operation to combat corruption, tax evasion, money laundering, fraud, base erosion, and profit shifting and illicit enrichment.

The tax transparency agenda have significant implications for domestic resource mobilisation, the success of the Sustainable Development Goals, the African Union’s Agenda 2063 and the bank’s high five priority areas.