Africa Must Lead on Capital Flight
The Pandora Papers revealed a wealth of information about the inner workings of offshore finance, leading to calls for international action to combat tax avoidance and evasion. This has been a longstanding problem in Africa, yet organizations on the continent are not leading the push for reform.
CAPE TOWN/OXFORD – The Pandora Papers, the largest investigative effort yet to shed light on the world of offshore finance, show just how serious the challenge of illicit financial flows is for Africa. The papers reveal that many prominent Africans hold assets in major financial centers abroad with the help of professional enablers who provide them with secrecy, ensure asset protection, and secure tax exemptions.
The investigation also demonstrated that such offshore services are not limited to the best-known tax havens. International standard-setters like the United States and the United Kingdom (directly and through its overseas territories) were shown to be major offshore financial players, illustrating the hypocrisy underlying discussions of reform for the past decade. And the Pandora Papers include further evidence that Asian financial centers also have become significant offshore players, underscoring the global nature of the problem.
Some African initiatives demonstrated early leadership in assessing the issue and developing potential solutions. The African Tax Administration Forum, which was created in 2008 and includes 38 African states, has been a noteworthy actor on tax reform issues. The High-Level Panel on Illicit Financial Flows from Africa, a joint effort of the African Union and the United Nations Economic Commission for Africa, first convened in 2012 and produced a much-discussed report on the subject in 2015. At that time, it seemed offshore finance would be a regular part of African Union discussions. Unfortunately, it is disappearing from the agenda.