This initiative seeks to curb illicit financial flows in Africa

In a sea of economic challenges facing Africa, there is a glimmer of hope as the continent makes significant progress in improving tax transparency. According to the latest Tax Transparency in Africa Report presented by Zayda Manatta, Head of Global Forum Secretariat, Africa is losing between $50 and $80 billion annually to tax dodgers and illicit financial flows. However, the report highlights a positive trend in tax transparency across the continent. The Africa Initiative launched in 2014 has played a crucial role in enhancing the exchange of information among African countries. This initiative has led to 33 African countries becoming members of the African Initiative and the Global Forum, with an additional 22 countries joining the Multilateral Convention on Administrative Assistance in Tax Matters. This membership allows African countries to request information from over 140 jurisdictions globally, facilitating collaboration and exchange of crucial financial data. One of the key benefits of improved tax transparency is access to beneficial ownership information, which reveals the ultimate beneficiaries of financial transactions. This information is vital for combating corruption and ensuring tax compliance both domestically and internationally. Despite the progress made, there are still countries in Africa that have not yet fully engaged in these transparency efforts. The reasons cited include a lack of awareness of the benefits, limited understanding, and capacity constraints. In order to address these challenges, it is essential to increase awareness among decision-makers, such as Ministers of Finance and heads of state, about the potential advantages of participating in international tax transparency initiatives. The interview with Zayda Manatta also touched on the issue of political will and capacity in countries that are not actively involved in tax transparency measures. She emphasized the importance of developing institutional capacity, not just in terms of training officials but also in establishing the necessary administrative frameworks and tools for effective implementation. When asked about the correlation between participation in tax transparency initiatives and a country's commitment to fighting corruption and promoting transparency, Manatta highlighted the positive impact of implementing transparency standards in combating issues such as money laundering and terrorism financing. While she did not directly link participation to corruption, she acknowledged the role of transparency in creating an environment conducive to tackling such challenges. The discussion also delved into the role of external partners in supporting tax transparency efforts in Africa. The African Union was recognized as a significant partner in promoting tax transparency, with its involvement in initiatives such as the Young Declaration. The private sector, while not directly involved in the implementation of tax transparency measures, was identified as a key player in changing behavior and promoting compliance among taxpayers. In terms of enforcement measures, Manatta emphasized the importance of leveraging access to information to ensure tax compliance and fair distribution of the tax burden. While the severity of penalties for non-compliance may vary by country, the availability of accurate financial data enables tax authorities to apply penalties effectively. Overall, the progress in tax transparency in Africa represents a positive step towards curbing illicit financial flows and promoting economic development on the continent. As more countries join these initiatives and strengthen their capacity to combat tax evasion and corruption, the prospects for enhanced financial governance and sustainable growth in Africa look promising.