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Home » African Countries Generated $1.9B from Tackling Tax Evasion and Illicit Financial Flows – OECD Report

African Countries Generated $1.9B from Tackling Tax Evasion and Illicit Financial Flows – OECD Report

African Countries Generated $1.9B from Tackling Tax Evasion and Illicit Financial Flows – Report

The 2023 Tax Transparency report shows that African countries realised additional revenues totalling $1.9 billion stemming from tackling tax evasion and illicit financial flows.

According to the progress report, voluntary disclosures, the implementation of information exchange mechanisms, and rigorous offshore investigations played a key role.

Moreover, the Tax Transparency report featured 38 African countries on their progress in tackling tax evasion and other illicit financial flows (IFFs) through transparency and exchange of information. 

In addition, five non-member countries participated in the study.

For the first time, one African country reported collecting additional taxes worth $11.6 million through the use of common reporting standard data.

Zayda Manatta, Head of the Global Forum Secretariat, cited a World Bank study that projected that participation in exchange of information mechanisms could increase African countries’ tax revenues from 5 percent to 19 percent of GDP.

“The more familiar countries are with this tool, the more they exploit this tool, the more revenue should be collected. And if you manage to monitor this link between revenue collection and exchange of information, we would be able to further demonstrate the benefits countries are getting from this tool,” she said.

Concerted efforts

The Tax Transparency report revealed that ten African countries have committed to automatic exchange of financial account information (AEOI) by a specific date and more are set to do so in the near future, with the assistance of the Global Forum and its partners.

Global Forum on Transparency and Exchange of Information for Tax Purposes co-produced the report.

Others partners were the African Union Commission and the African Tax Administration Forum, with support from the African Development Bank (AfDB).

Since 2014, the Africa Initiative is a partnership of the Global Forum, 33 African countries and 16 partners, including the AfDB and the African Union Commission.

Other partners include the European Union and the governments of Switzerland and the United Kingdom. 

The Africa Initiative seeks to equip African countries to participate in advances on global transparency, to better fight tax evasion and other illicit financial flows and ultimately improve domestic resource mobilisation.

Losses through tax evasion illicit flows

At the same time, a report by the Organisation for Economic Co-operation and Development (OECD) has revealed that Africa loses more than $60 billion each year in illicit financial flows.

This as African governments continue to step up efforts to bolster domestic resource mobilisation in the face of economic headwinds that include global inflation and mounting debt levels.

However, with the new tax measures in place from 2009 to 2022, Africa has witnessed increased tax revenue, interest and penalties.

Speaking during the launch of the Tax Transparency report at the 13th Meeting of the Africa Initiative, South Africa’s Minister of Finance Enoch Godongwana emphasized political will in efforts to increase tax transparency.

 “During the past eight years, the Africa Initiative has changed the tax transparency landscape in Africa and aided the mobilisation of more than $329 million in domestic resources,” he said. 

He called for the Africa Initiative to strengthen African countries’ capacity to leverage exchange of information standards and protocols.