MTN named among companies draining the coffers of other African nations including Uganda

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The South African Revenue Service has indicated that the country is at very high risk of illicit financial flows, and particularly transfer pricing, and that some of the largest companies listed on the Johannesburg Stock Exchange, including SAB Miller and Anglo American, have been implicated in tax avoidance stories relating to other countries.

According to South African civil society group African Monitor the country’s legal and regulatory framework for anti-money laundering from criminal activity and counter-terrorist financing is robust, but ‘there is little focus on other forms of illicit financial flows, especially those perpetrated by the multinationals’.
According to The Financial Secrecy Index 2018, South African companies which have an increasing footprint across sub-Saharan Africa are also complicit in draining the coffers of other African nations.
June 2016, President Museveni accused multinational companies especially the tele-comminication companies of cheating Uganda taxes of up to 400 US dollars every year. This he says happens through incoming international calls that government is yet to get equipment to monitor.

While addressing at the budget reading, the head of state asked the tenth parliament to help him come up with a policy to curb this as government prepares to acquire equipment that can be used to monitor and register those calls so that the telecoms are brought to account for the revenue generated.

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Telecoms giant MTN – the largest cell phone company on the continent in terms of subscribers – has shifted billions of Rand, for example, from its subsidiaries in Ghana, Nigeria and Uganda through Mauritius.
These countries have responded by freezing payments and Uganda has notified the company of outstanding taxes owed.
Estimates, African countries alone have lost over $1 trillion in capital flight, while combined external debts are less than $200 billion. So Africa is a major net creditor to the world – but its assets are in the hands of a wealthy élite, protected by offshore secrecy; while the debts are shouldered by broad African populations.

A global industry has developed involving the world’s biggest banks, law practices, accounting firms and specialist providers who design and market secretive offshore structures for their tax- and law-dodging clients. ‘Competition’ between jurisdictions to provide secrecy facilities has, particularly since the era of financial globalisation really took off in the 1980s, become a central feature of global financial markets.

The problems go far beyond tax. In providing secrecy, the offshore world corrupts and distorts markets and investments, shaping them in ways that have nothing to do with efficiency. The secrecy world creates a criminogenic hothouse for multiple evils including fraud, tax cheating, escape from financial regulations, embezzlement, insider dealing, bribery, money laundering, and plenty more.

It provides multiple ways for insiders to extract wealth at the expense of societies, creating political impunity and undermining the healthy ‘no taxation without representation’ bargain that has underpinned the growth of accountable modern nation states. Many poorer countries, deprived of tax and haemorrhaging capital into secrecy jurisdictions, rely on foreign aid handouts.

read: MTN Uganda license expires, UCC seeking views on whether to renew license

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