Charities call for an end to tax havens, inequality

President Uhuru Kenyatta speaks at the Grow Africa Investment Forum during the World Economic Forum on Africa in Kigali, yesterday.

Money lost from Africa through tax havens can save four million lives a year and fund universal education, Oxfam has said.

Winnie Byanyima, the international executive director of Oxfam, has said the ongoing meeting attended by President Uhuru Kenyatta among other government and business leaders in Kigali should address the growing inequality that is heightened by theft.

“Ordinary, Africans are currently unable to see enough of the benefits of economic growth, which instead of reducing poverty and delivering shared prosperity, is benefiting an exclusive class of elites with more money and power than ever before,” Ms Byanyima said. Africa is the most endowed with natural resources of all continents.

The UK agency is leading other international societies to rally for tougher controls to end extreme poverty and reduce inequality, considering that 10 of the richest Africans control the wealth equal to the GDP of Kenya.

ONE, another global civil society, is demanding that all African States have a public register of beneficial owners of all businesses operating in their countries to curb tax evasion. Making public the actual owners of businesses, rather than shell companies and trusts as directors, would greatly help tracking illicit transactions, ONE told the World Economic Forum for Africa summit in Kigali.

The call is a follow up from outcomes of a global anti-corruption summit held last week in London, coming in the midst of the major expose of financial secrecy unveiled in the Panama Papers.

“The loss of public funds to money laundering – often in collusion with banks and law firms based in G20 countries – has a direct impact on the ability of some states to provide basic services like health and education,” said Mwambu Wanendeya, Africa Executive Director at ONE. The society is involved in tackling extreme poverty around the World, but with a focus on Africa.

Mr Wanendeya added that the world’s poorest people continue to pay a heavy price for the siphoning of money out of African economies, through avenues like faceless owners of major businesses.

Among the recommendations from the London Summit that should now be considered according to ONE, is the implementation of the Fair Play Standard across the continent as demanded by African civil society organisations and activists like Mo Ibrahim, Winnie Byanyima, John Githongo and Rakesh Rajani.

As the Panama Papers showed, flaws in the global financial system enable corrupt individuals and companies to hide details of their financial affairs under the noses of governments and law enforcement agencies.

If just a portion of the stolen and hidden funds was properly taxed and the revenues invested in public services and systems, this could help developing countries finance their own fight against extreme poverty.

Mineral exploitation

Besides the human cost of corruption, greater transparency increases civic and investor confidence with GDP growth estimated at 0.6 per cent annually, recent studies have estimated.

A study estimates that increased transparency resulting from disclosures may lower the cost of capital by Sh630 billion ($6.3 billion) to Sh1.2 trillion ($12.6 billion) for American-listed companies.

Corrupt individuals know they can conceal their identities through anonymous shell companies, which then funnel the cash into other companies, property and assets.

Companies involved in mining and mineral exploitation are among the worst abusers of transparency. Now African good-governance activists including a former Kenyan Permanent Secretary Githongo, say taxes paid by all companies should be made public to enhance citizens’ ability to scrutinise their operations and dealings.