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Africa’s crackdown on tax avoidance nets £204m to boost development

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A team of tax experts from Kenya will be deployed to Botswana early next year in the latest round of an initiative that seeks to boost domestic revenue collection to fund national development plans.

The move was announced last week at the second global partnership for effective development cooperation meeting in Nairobi, which brought together representatives of governments, civil society, the private sector and UN officials.

The Tax Inspectors Without Borders (TIWB) project focuses on tackling tax avoidance by improving local audit capacities, with a particular emphasis on ensuring multinationals conform with local tax laws. James Karanja, head of the TIWB secretariat, said that since the launch of the project in June last year, eight pilot projects in African, Asian and Latin American countries had netted more than $260m (£204m) in additional tax revenue. More than $100m of that was generated through tax audits in Zimbabwe.

The programme, which is supported by the Organisation for Economic Co-operation and Development (OECD) and the UN development programme (UNDP), helps countries to recover revenue from multinationals that had been paying less than their fair share. It also seeks to build local audit capacity and is seen as key to meeting the UN’s sustainable development goals. The African programme is being carried out in partnership with the African Tax Administration Forum.

The UN describes domestic resources as “the largest untapped source of financing to fund national development plans”, and has listed support to build capacity of national tax audit systems as a priority.

In an interview with the Guardian on the sidelines of the conference, UNDP administrator Helen Clark said the tax auditors programme was part of a new agenda of global partnership that sees aid as “catalytic in supporting countries to be able to leverage other sources of financing. This is a great example of south-south cooperation that has the critical effect of boosting local systems while ensuring international companies that specialise in paying tax to nobody are compliant with local laws and contribute to domestic resource mobilisation.”

Clark said so much has changed since representatives of 161 countries endorsed a plan for effective development cooperation in Busan, South Korea, in 2011 that all players needed to be adaptable and come up with new approaches to tackle multiplying crises around the world.

“It has been an extraordinary few years,” she said. “[Since 2011] Syria tipped over. Libya, Yemen as well. The crisis in South Sudan broke out, and you had the continued crisis in northern Nigeria as well as Mali. For Syria, the spillover effects of that were felt all the way into Europe, probably playing into Brexit and other developments.”

Clark said it was essential for aid to be aimed at seeking long-term solutions by improving local conditions. “You need to go beyond relief to investing in people to improve the circumstances that they find themselves in,” she said.

Emergency aid was still vitally important, she added, to avoid millions joining the queue of those displaced, which would make the refugee crisis more difficult to manage.

But, citing a visit to Mali, which has struggled to cope with an insurgency that broke out in 2013, she said it was essential to tackle root causes. “People leave because of a lack of opportunity. When I look at all those photos of boats trying to come into Malta or Sicily I’m seeing overwhelmingly young African men of working age – bright-eyed people wanting something real to do.”

The former prime minister of New Zealand said opportunities could be provided through legal channels of migration to Europe and through significant investment to improve what she called “positive opportunities” domestically. “A senior UN official told me there are a lot of negative opportunities for youth in Mali. You can join a jihadist group. It pays more than selling wares at traffic lights. You can also join criminal gangs that do everything from trafficking people to drugs and arms. Or you can try to make the crossing into Libya to take a boat into Europe.”

Clark said improving local capacity and helping countries to boost domestic revenue streams and other sources of financing would continue to be a focus for the UNDP.

The OECD secretary general, Angel Gurría, who also spoke at the conference, hailed the “concrete results” achieved by the TIWB programme and said the initiative would be broadened.

Thirteen projects are under way – in Botswana, Costa Rica, Ethiopia, Georgia, Ghana, Jamaica, Lesotho, Liberia, Malawi, Nigeria, Uganda, Zambia and Zimbabwe. And next year, auditors will be sent to the Republic of the Congo, Egypt, Uganda, Cameroon and Vietnam.

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