How the global North rips off Africa, and how to prevent it

Winnie Byanyima is the executive director of Oxfam International. ILLUSTRATTION | JOHN NYAGAH | NATION MEDIA GROUP 

By Winnie Byanyima

In Summary

• African countries lose the most from tax dodging. African governments must, therefore, do more to push for a full reform of the global tax system, and demand action from countries such as the UK whose financial centres sit at the heart of the global network of tax havens. They must do more to stamp out tax abuse and other forms of corruption at home. 

The latest batch of the Panama Papers from a group of investigative journalists focused on shell companies and corruption in Africa. I read their findings with great interest and noticed how this round of tax revelations didn’t attract as much media interest as the first damning exposé.

This could, of course, be for several reasons but one that was apparent – to me at least – is a complacent acceptance that Africa is wholly corrupt. A “there is nothing we can do” attitude.

This is wrong. We must examine the root causes and do something to address them. As the Panama Papers show, much of the tax avoidance or criminal movement of finance on the continent is made possible by a system propped up by a number of banks, law firms and other outfits based outside of Africa, working in collusion with African economic and political elites. It is a system designed in the global North that helps Africa’s wealthy and powerful elites to cheat the rest of us.

Scourge on global community

Tax abuse is a scourge on the global community, but especially on Africa. Our continent, which is blessed with vast arable land and other natural resources, is filled with families who go to bed hungry; ill and vulnerable people who die of preventable and curable diseases, and children who would love to be in school, but whose parents can’t afford the fees.

Why don’t all these people have these essential things many in the North have? The governments that are meant to watch over them, put their interests first and deliver vital services, are in bed with big companies and wealthy individuals who are involved in large scale tax abuse that is facilitated, some may say rigged, by the global North.

This is really damaging for Africa. One in 12 African children dies before their fifth birthday; 34 million children are being deprived of primary school education while Africa has the world’s lowest secondary school enrolment rates. Some 40 million young people are out of work on our continent. It is a tough time to be a young African. Meanwhile, offshore companies connected to 44 of Africa’s 54 countries appear in the Panama Papers. Let there be no doubt, this is no coincidence.

We need inclusive growth

Yet we have reasons to be positive. Our continent, despite the challenges, is raising its best educated generation yet. With the right opportunities and investment in our youth, they could drive Africa’s great potential be it in the extractives industry, agriculture, finance and beyond. By 2030, Africa could have tens of millions of stable new jobs for these well-educated young adults. But for this to happen, economic growth has to be inclusive. Tax avoidance and evasion must stop.

Governments around the world have been talking a lot lately about tax abuse, but it’s mostly words and very little action. Our current tax system is frankly broken – governments have to recognise this and the harm it does, and then rebuild it. It just doesn’t make sense to tinker with the engine of a burnt out car.

African countries lose the most from tax dodging. African governments must, therefore, do more to push for a full reform of the global tax system, and demand action from countries such as the UK whose financial centres sit at the heart of the global network of tax havens. They must do more to stamp out tax abuse and other forms of corruption at home. 

The buck stops with our governments as they represent the people who are losing out on basic needs. Politicians and government officials know this – they are people too – and so I encourage them to say “no” to tax avoidance and evasion, and end financial secrecy. This is an urgent imperative.

Winnie Byanyima is the Executive Director of Oxfam International Budget Partnership. E-mail: wbyanyima@oxfam.org.uk