Financial Transparency Coalition

In late June, we met with members of the Tax Justice Network Africa (TJN-A) and the Africa International Trade Union Confederation (Africa ITUC) for a training and strategy session in Naivasha, a town northwest of Nairobi. The goal of the event was to bring people together to discuss and analyze the problem of illicit financial flows and the lack of transparency, particularly within the extractive sector.

It wasn’t long after we left the city limits of Nairobi that the landscape changed dramatically, quickly shifting from shopping malls and apartment complexes to dirt roads and shacks. The drive, which should only take about an hour, took twice as long because the roads aren’t build to sufficiently accommodate the regular traffic from tourists, vacationers, and large trucks.

We know illicit financial flows are a worldwide problem, and one that has devastating effects on development. Research by FTC member Global Financial Integrity shows that the developing world lost US$946.7 billion in illicit outflows in 2011. That’s more than seven times the amount the developing world received in aid the same year. With a capital flow ratio like this, the scene on the route to Naivasha is hardly surprising. And it’s not just in Kenya; similar conditions exist around the world.

Often, when discussing the problem of illicit financial flows, we point to the policy changes needed to address the issue. Of equal importance, however, is how we mobilize groups to fight for these changes. In the global forums where issues of illicit financial flows are being debated, it’s critical to have a strong unified voice pushing for tougher standards. In order to have a strong presence in the global policy debates, we need to foster awareness and ownership of these issues at the national and regional levels. Multiple stakeholders brought together at these levels can steer the dialogue and create a true groundswell for change.

This is exactly what FTC member TJN-A is working towards in Africa. The purpose of the training was to raise awareness, share experiences, and mobilize participatns to raise awareness in their own countries. Illicit financial flows are a complex and multifaceted issue, which is why we need to bring stakeholders from a variety of sectors together to create a unified voice on this issue.

When targeting a multinational corporation for aggressive accounting schemes and abusive transfer pricing, the actual workers in the mines and plants – who often suffer the consequences of these actions first hand – are some of our best allies in pushing for change.

This event brought together participants from more than 20 African countries. Presentations and debates over the three days covered topics such as the link between tax and development, harmful tax competition, and the unfair burden placed upon workers when corporations aren’t playing by the rules. Participants will continue to work together to support each other’s work at the national level and create a link to regional and global policy debates on illicit financial flows.

FTC members in Africa are not alone in this effort. We are working with stakeholders across five continents to help create a force for global solutions and change that benefits everyone.

Photos courtesy of the Tax Justice Network – Africa