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 complacency or 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 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 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 few wealthy and powerful elites to 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 can’t afford the fees.
Why don’t all these people have these essential things many in the North have? Many of the governments that are meant to watch over them, put their interests first, and deliver vital services are comfortably in bed with big companies and wealthy individuals who are involved in large-scale tax abuse that is facilitated, and some may say rigged, by the Global North.
This is so damaging for Africa. One in 12 African children dies before their fifth birthday. Thirty-four million children are being deprived of a primary school education, and Africa has the world’s lowest secondary school enrollment rates. Forty 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.
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 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’s mostly words and very little action. Our current tax system is frankly bust – governments have to recognize this and the harm it does, and then rebuild it. It just doesn’t 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.