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Published On: Mon, Aug 22nd, 2016

Panama Papers expose Africa tax evasion

THE latest batch of the Panama Papers, released by a group of investigative journalists, focuses on shell companies and corruption in Africa. I have read their findings with great interest and noticed how this round of tax disclosures did not 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 complacency or acceptance that Africa is wholly corrupt, an attitude that there is nothing we can do.

This is wrong. We must examine the root causes and do something to weed them out.

As the Panama Papers show, so much of the tax avoidance or criminal movement of finance on the continent is made possible by a system that is propped up by a number of banks, law firms and other outfits based outside Africa, working in collusion with African economic and political elites.

It is a system designed in the global north that helps Africa’s few wealthy and powerful elites cheat the rest of us.

Tax abuse is a scourge on our global community, but especially for 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 cannot 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 all these people put their own interests first and fail to deliver vital services. They are comfortably in bed with big companies and wealthy individuals who are involved in the large-scale tax abuse that is facilitated — some may say rigged — by the global north.

This is so damaging for Africa. One in 12 African children die before their fifth birthday. About 34-million children are being deprived of primary school education; Africa has the world’s lowest secondary school enrolment rates.

About 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 that this is no coincidence.

Yet we have reasons to be positive. Our continent, despite the challenges, is raising our 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 new, stable, wage-paying 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 is mostly words and very little action.

Our current tax system is, frankly, bust. Governments have to recognise this and the harm it does, and then rebuild it.

It just does not make sense to merely 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.

Byanyima is an executive director of Oxfam International.