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Illicit financial flows cost Africa billions of dollars – Global Tax Justice Network

A new study conducted by a network of NGOs, including the Global Tax Justice Alliance, revealed that Tax evasion costs Africa more than $25 billion a year.

As African countries are grappling with the Covid-19 pandemic, tax evasion is considered “unacceptable”, as it reduces revenues that could be spent on citizens’ health.

Twenty-three billion dollars is the estimated amount that multinationals, local or foreign, operating in Africa have taken away from the countries in which they work. To this sum must be added over two billion held by rich Africans and hidden in tax havens.

The country most affected by this phenomenon of tax evasion is Nigeria, followed by South Africa, Egypt, and Angola. But even a country like Mauritius, which is considered by some to be a tax haven, is victim of the phenomenon, with an estimated loss of $60 million.

As revealed in a recent OECD report, such evasion is not always illegal since many multinationals, particularly in the mining sector, negotiate favorable tax conditions with states in exchange for their investment. This is what is modestly referred to as tax optimization, a kind of legal evasion, as it were. But whether it is legal or not, this capital flight handicaps countries.

The Global Alliance for Fiscal Justice estimates that in Africa, on average, fiscal justice accounts for half of national health budgets. In other words, in times of pandemic, African countries could hire ten million more nurses per year if the billions earned in Africa had stayed in Africa.

According to the Global Tax Justice Alliance report, countries throughout the world lose $427 billion in revenue annually from wealthy individuals and corporations abusing tax laws.



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