Panel Discussion: A UN tax convention and the fight against IFFs in Africa

In the absence of a global body and architecture to govern tax rules, the UN tax convention aims to set ambitious global standards, create the transparency and accountability mechanisms to achieve the IFF's goal, and establish a globally inclusive intergovernmental tax body under UN auspices.

The panel highlighted the importance of having a global governance and tax body and how this will affect African countries as well as the African Union in the fight against IFFs. Africa loses close to $90 billion annually in illicit financial flows, and this amount is more than the combined amount of ODA and FDI that Africa receives at any given time. In the aftermath of the COVID pandemic and due to the ongoing war on Ukraine, several African countries are facing economic slowdowns and fiscal imbalances. This trend, coupled with the growing debt crisis on the continent, has left several African countries in a dire situation when it comes to addressing development projects and social protection programmes such as schools, health, and pensions. The issue of IFFs is becoming more prominent than ever as countries face dwindling budgets and limited resources, mainly as a result of debt servicing costs and austerity measures.

African countries, under the leadership of the African Union, have expressed their concern and dissatisfaction with the current tax rules, which many agree favour multinationals and countries from the global orth. The UN tax convention aims to unify global tax rules and governance, with Africa also playing an important role in the decision-making process and the outcome. The convention aims to establish a global minimum corporate tax and also seeks to establish a mechanism to prevent base erosion and profit shifting (BEPS). The side event also discussed how IFFs in Africa have affected the lives and futures of young Africans by illicitly syphoning off resources that would otherwise be used for education and job creation. It also has a direct impact on women by limiting their opportunities to achieve the UN SDGs.

In the concluding remarks, the panel highlighted the importance of the African Union's leadership at the UN and the G-20 to reiterate Africa's position on the reform of the global financial system, of which taxation is a part, and also urged the Union to focus more on action than on work.

See also our publications on “Africa`s rising debt and the emergence of new creditors” and “Debt management and governance in Africa.”

For further information, please contact Mr. Amanuel Desalegne, Programme Manager at the FES African Union Cooperation Office, at Amanuel.Desalegne(at)fes.de.