African states urged to clamp down on illicit cash flows

Sat, 27 May 2017 11:07:54 +0000

By BUUMBA CHIMBULU

ZAMBIA should introduce laws which require multinational companies to publicly disclose their revenues as a way of fighting illicit financial flows, economist Lubinda Habazoka has suggested.

Dr Habazoka observed that most African countries, including Zambia, did not have stiff laws which would assist nations fight illicit financial flows.

“You will find that mostly in Africa, including Zambia, that our laws are inadequate to ensure that we capture all revenues that are made by these companies, especially those operating in the mining industry,” he said.

He said in an interview that Africa was losing an estimated US$50 billion annually as a result of illicit financial flows through undeclared profits.

Dr Habazoka observed that most African countries did not have the manpower and expertise to police the highly sophisticated schemes some multinational companies used in tax avoidance.

“One of the notable methods used by multinationals is that Africa, including Zambia, have seen corruption at very alarming levels. The other one is lack of skills and manpower to police very educated financial personnel used by multinationals to twist the legal framework for their own benefit,” he said.

He suggested that policymakers across the continent should publish what they received from multinational companies while the companies should also disclose what they paid in terms of taxes to governments.

Dr Habazoka observed that some multinationals took advantage of the tax incentive policymakers offered after an investment.

He explained that some investors changed the names of their companies every five years to take advantage of the tax breaks offered by African governments.

“My main advice is to ensure that stiff laws are put in place.  You will find the same company is sold every five years because the law says if you invest a certain amount of money, you get tax holidays for a certain period,” he said.