Tax evasion steals millions from Africa’s poor

by Thabile Manala 0

Corporate tax evasion in the African continent is a leading cause for the rising inequality.

Winnie Byanyima, executive director of Oxfam International, told CNBC Africa at the World Economic Forum (WEF) on Africa that there are so many legal loopholes that companies are using to take out their profits and not pay their fair share of taxes.

“Although Africa is growing, it’s really rising for just a few and millions are left behind because the money that would have come to the public purse to lift people out of poverty, to invest in the jobs our people need, is not coming in,” she explained.

According to Byanyima, African governments are “sleeping” in comparison to the G20 countries. Europe and other rich countries have been involved in a process of trying to close these loopholes so their companies pay them the taxes that are due.

Byanyima said, “African governments are locked out of these discussions. A few of them have been invited but they are just guests, they are not sitting there on equal footing.”

Oxfam has initiated a meeting for African leaders in Addis Ababa this July to table how development will be financed in the next 20 years. She said it is important that African ministers rally and demand a reform of the global corporate tax system. All countries, rich or poor, will have a say in reforming the tax system.

“If we have our fair share, the total we are losing is much more than the total aid that is coming into Africa.”

A contentious issue that is set to be tabled at WEF Africa is the youth dividend. This refers to the African phenomena where there is 75 per cent of the African population that is below the age of 35.

Byanyima said by 2050 this continent will have more working age people than China and India put together.

“This is a huge resource for us, if young people can be skilled and afforded the opportunity to work then this will mean prosperity for Africa.”

However, this potential does not come without its challenges. Byanyima raised two concerns that firstly; the money that is coming from African natural resources is not being taxed so it can be brought back into the country.

Secondly, the spending priorities where what is being collected or borrowed is not being put back in areas that give jobs to young people. Byanyima believes, “It is their [youth] birth right to be part of the prosperity that Africa is seeing now, but they are not part of it.”

It is not all doom and gloom as there are African countries that are creating a favourable environment for the youth in creating opportunities, while others create a difficult environment.