Moderator:
- Robert Mwanyumba, Regional Coordinator, Transparency International
Panelists:
- Panelist 1: John Githongo, Journalist, former head of Transparency International Kenya
- Panelist 2: Luckystar Miyandazi, Tax and Domestic Revenue Mobilization Adviser, African Union Commission
- Panelist 3: Francis Kairu, Policy Officer – Tax and the international Financial Architecture, Tax Justice Network Africa
Moderator: Welcome, the room will heat up as the conversation does. In 2002, negotiations on tax matters began. The Africa Group referred a proposal to the UN on inclusive international tax cooperation. When we discuss the current state of international architecture, why the need for reform?
Lucky: I want to define illicit financial flows. Cross border funds illegally transferred or utilised: commercial, criminal, and corrupt. Estimated $50bn lost annually through illicit financial flows. UNCTAD 2021 – $89bn lost approximately annually. It’s imperative for us to re-emphasise and deal with illicit financial flows. It constitutes 3.7% of the continent’s GDP.
The issue of international financial architecture, also representation and equality: the need for reform has been discussed since the 2008 crash. Also India and China, G20 etc, are all playing a greater role. Now Africa has a permanent seat at G20, but more can be done. Conflict, climate and covid – we were affected by all of these things in Africa.
We’re calling for a more equitable tax structure, security for the continent etc.
Moderator: I like the phrase, if you’re not on the table, you’re on the menu. John, why do reforms matter so much to you?
John: Next year will be a critical year for Africa. It has been at the forefront of championing new measures. Next year, debt service is over $70bn for Africa. Leaders are realising we need a structured manner. There’s an urgency, partly because Africa has taken a leading role in ownership rules of companies etc, Transparency International has been at the forefront of advocating for changes.
Moderator: What are the critical proposals around reform right now?
Francis: There’s a general consensus now that the current architecture is not fit for purpose but also doesn’t balance interests of developing countries with developed countries, and it doesn’t respond to issues with the speed and skill required. Is this call new? No, it’s as old as the League of Nations. When finance ministers met in May last year, they made their positions clear – there was need to structure, extend and we now see since 2022 (the ‘watershed year’). The Africa group at the UN went ahead and filed a revised resolution, which by the end of 2022 was adopted at the UNGA. Following the adoption, the UN Secretary General was tasked with producing a report which would involve consultations with stakeholders and set a timeline and solutions relating to reforms on IFI and international tax cooperation.
The Secretary General gave an edited version this year and proposed a plan. The tax justice movement now says that an appreciation of the issues is clear at all levels. In September, the final version was released. It proposes: Having a UN multilateral instrument (binding), a UN convention on international tax cooperation (legally binding, with a broader governance framework), or a UN framework (not legally binding). I know some will say the UN is not the best, what I ask you, which other institution?
Lucky: I think the African group have been very clear and know what they want. Wwe say we want to finance most of our development. We have a young, growing population. We need to acknowledge the fact that Africa has been the lead on this. We want stability and simplicity. Yesterday, a minister from Sierra Leone was clear – on digital tax – we don’t even have physical systems to tax those systems. We have to start somewhere else in Africa. We need to tackle illicit financial flows, and encourage transparency – e.g. beneficial ownership. Getting rid of the secrecy. We need to focus on dispute resolution.
We have a big number of countries in Africa that are highly indebted. I hope the need for support is made clear at the African Union, at the climate summit in Nairobi that happened recently.
Moderator: John, what are your thoughts on the proposed reforms?
John: Africa is ahead in many ways. Global geopolitics has changed and the debt crisis controls us. Looking at the UN’s recommendations, in 2003, Africa was leading on the declaration against corruption. 23 countries on the continent have some kind of rules on beneficial ownership. Countries should go ahead with implementation.
Moderator: Lucky, what specific reforms around international tax would you propose
Lucky: On the taxation of the digital economy, it’s a big issue for Africa. Companies can cleverly avoid paying tax in African countries. The AU is working closely on African tax. Training is also needed on tax.
Moderator: It looks like there are changes happening, but where are the voices of African states? There are other processes – how should Africa build consensus to advance the reforms? What do states need to do?
John: We’ve seen what’s possible, with the kind of leadership like Nigeria, vis a vis the UN resolution, and we must keep that up. Africa is increasingly finding its voice.
Lucky: We’re not only digesting what’s coming to us, but I will start with a unified African voice. Being supported by the African Union, and in talks with the Africa Group to see what they come up with on international tax. The emphasis on enhancing capacity building. We want to share examples of what works. Let’s not drop our priorities in favour of what’s popular.
Francis: The African Union needs to continue to bring countries together, that technical issues are addressed. Multinationals are evading tax in all places – developed and developing countries. On the issue of clarity – I have seen African countries have made their status known – they prefer a UN multilateral convention which is binding. It’s legally binding and is the best option.
Question and Answer session:
Q: We are pushing for global cooperation, but how would that materialise if we are not contributing? Will our contribution be past historical injustices? Or the 3-5% GDP spending on climate actions? The form of IFFs? Or contribution of fresh money commensurate to our economies?
A (Lucky): We want to fight illicit flows to get our money back. Africa is a very rich continent. We could finance our own development if we get that money back. On contribution, we are setting up institutions to help us fund our own development.
Q: The African Union has not been able to solve their own problems – Sudan, Libya etc. My question is about BRICS – African nations are extremely rich, leaders have money deposited in America and London – what can Africans do to stop corruption and be more transparent with their own people? Financial institutions will not invest in countries where financial regulations are in place.
A (John): I hear Mohammed’s frustration. The AU today is much more effective than the OU. We have the youngest population on the planet. There’s a challenge with providing simple public goods. We see the coups across the Sahel. We have a major corruption problem with leaders – and conspicuous consumption with proceeds of corruption. AU rejects these unconstitutional coups.
A (Lucky): I want to say ‘what is the AU?’ The AU is us. The EU in Europe, you cannot take away being European from Europeans. We need to take ownership, it’s not just heads of states, it’s also citizens.
Q: I am 27, so I have maybe forty more years to pay tax (and debt). Where will the global financial architecture be creating a space for young people? Young people are doing great work on mobilisation.
A (Francis): – we must strengthen our tax administrations. I know we have inherited problems, but we are also creating problems for future children. Our fate lies in our hands, though. We must advance a position that reforms of architecture will not be enough if they don’t address inequalities.
Q (Celestine – AA Nigeria): An interdevelopmental body on tax is required. But talking about financing for development, we must also look inwards. I asked the WBG president yesterday, is there a mechanism to ensure the money going to africa goes where it is meant to go. The idea of giving away what we have to get FDI, it is not true. Since 2014, the Abuja Convention, there are plans towards an intergovernmental body.
Q (Emma Christian Aid): We are talking about the IMF review of quotas. Discussions are not looking good, indicates G20 will not keep commitment to support the review. But, we may get a third chair for SSA on the quota review. What are your thoughts on this, especially from the AU?
Q: You said Africans will become united, but you are the ones that are making the decisions, and you are Westerners will not accept that Africa will develop. We must not lose sight of this fact, and the chinese understand this perfectly.
Q (Buky):I want to support my brother, that the statement about the AU being open is not true. It’s expensive and difficult to engage. When we talk about the global financial architecture, we don’t talk about care work. What does this reform look like without including care? And continuing to use GDP that does not count these forms of work?
(Collective answers to all questions)
A (Lucky): I think you need to learn more about the AU, we have a dynamic engagement with youth. I think the AU is accessible. The AU is ours, so call is accountable. On the issue of Libya, I think this cuts across to what we’re doing here and we agree that it’s time that Africa prospers. In my finishing remarks, we work in unity as Africa.
A (Francis): I wish we had more time to answer. The call for a UN tax convention will overhaul how countries do international tax cooperation. To Emma, I think we need to get to the point where we see IFIs stop just paying lip service to reforms, and the new African chair is a great opportunity to see they are committed to reforms. A third chair is not enough, to see redistribution of voting rights etc. We haven’t seen Africa organising around this enough. Our colleague from Akina Mama, we have called for reforms that address issues of our youth, inequality, unpaid carework.
