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Tax evasion by multilateral corporations bleeds African revenue— Panelists

Published

1 year ago

September 1, 2023

A panel of experts at the third African Conference on Debt and Development (AfCoDD III) have argued that multilateral corporations in Africa are reported to be using the informal sector to evade tax.

As the executive director of Tax Justice Network Africa, Chennai Makumba, who was one of the panellists, noted that multilateral corporations were leveraging the informal sector to escape taxes, which was one of the reasons African nations were struggling to raise domestic resources.

According to estimates from the United Nations Conference on Trade and Development (UNCTAD), Africa loses significant resources as a result of illegal money flows (IFFs). These flows come from a variety of sources, including money made from criminal activity, tax evasion, profit-shifting abuse, trade mis-invoicing, and corruption, among others.

“Need to look at the structure of our economies, many of them have informal services and governments are struggling with how to capture these informal services sector.

“Certain companies use the informal sector to evade taxes, these are corporates hiding behind the informal sector that we need to target. Africa is losing about US$90 billion on an annual basis due to revenue loss,” Makumba said.

Briggs Bomba from Trust Africa, a different panellist, stated that the time had come for Africa to consider major ideas that would revolutionise the continent. Bomba emphasised the necessity for big-picture thinking in order to find solutions to the problems the continent was currently facing.

“This is a moment for Africa to manage our way and ideas and think big and outside the limitations of the ideas and out forwards ideas to help us. We should not be shy as activists in terms of these big ideas,” he said.

One of the techniques of most multilateral cooperations in this regard is “trade mispricing”: a situation where a company artificially sets the prices for goods or services sold between its subsidiaries to avoid taxation. Another approach to it is lobbying for tax breaks as a reward for basing or retaining their business in African countries.

Tax regimes across the continent have been observed as possible factors for the decline in investment, and public revenue shortage that hinders development. Senegal, Kenya, and Nigeria are among the countries that recently announced tax reforms. But beyond the expansion of the tax net to include more “common men” or the middle class, policy efforts must be driven to capture what’s due to the state from corporate citizens like multilateral cooperations.

Related Topics:Africa Featured multilateral corporations Tax evasion

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Dangote insists refinery has 500 million litres of petrol to meet Nigeria’s needs

Published

2 days ago

October 30, 2024

Ifeoluwa Dada

Aliko Dangote, the chairman of Nigeria’s Dangote oil refinery, has claimed a 500 million litre gasoline stockpile, refuting claims by some oil marketers that they had to augment Dangote’s supplies with imports to address fuel shortages.

Africa’s wealthiest man claimed to be a guest of the Nigerian President, Bola Tinubu, along with the finance minister, the head of the state-owned NNPC, and oil regulators at a meeting in Abuja on Tuesday.

The goal was to reconsider a policy mandating that NNPC sell crude oil to the Dangote refinery in local naira currency in an attempt to relieve pressure on foreign exchange and assist the massive refinery in obtaining enough crude to meet its 650,000-barrel-per-day capacity.

After the discussion, Dangote explained that he should not be held responsible for fuel shortages in Africa’s top oil-producing nation because his company does not deal in the retail sale of petrol.

He added that it costs him money to keep fuel in storage tanks.

“I expect the NNPC and marketers to stop importing. They should come and collect; we have everything they need,” said Dangote.
Two weeks ago, local fuel traders began increasing imports, claiming that the Dangote refinery was unable to meet domestic demand, exacerbating fuel shortages.

In September, the Dangote Oil Refinery in Lagos started processing petroleum to produce 25 million litres per day. The objective is to progressively boost output to 35 million litres per day, which Dangote thinks will be enough to satisfy regional demand. However, the industry regulator stated at an oil conference in Lagos on Monday that Nigeria uses 45 to 50 million litres of petrol every day.

President Tinubu advised stakeholders to concentrate on providing enough petrol for domestic consumption to lessen reliance on imports, according to a government spokesperson’s statement.

In order to settle the naira pricing of oil and refined goods, he also instructed them to use Afreximbank, the financial adviser for the naira crude sale plan.

The refinery was forced to rely on costly imports after Dangote filed a complaint alleging that oil majors were preventing it from accessing locally produced oil by selling it above market value or claiming it was unavailable. Previously, Dangote had to purchase crude on the international market.

The plan to sell crude in naira will continue, according to Wale Edun, Minister of Finance and Coordinating Minister of the Economy, and the government would not meddle in setting the oil industry’s exchange rate.

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Ghana considers imports from Nigeria’s Dangote oil refinery

Published

3 days ago

October 29, 2024

Ifeoluwa Dada

The head of Ghana’s oil regulator stated on Monday that once Nigeria’s Dangote Oil Refinery was fully operational, Ghana might purchase petroleum products from the facility, reducing the need for more costly exports from Europe.

Mustapha Abdul-Hamid, the chairman of Ghana’s National Petroleum Authority, stated at the OTL Africa Downstream oil conference in Lagos that this might result in the elimination of $400 million in petroleum imports from Europe each month.

“If the refinery reaches 650,000 bpd a day capacity, all that volume cannot be consumed by Nigeria alone, so instead of us importing as we do right now from Rotterdam, it will be much easier for us to import from Nigeria and I believe that will bring down our prices,” Hamid said.

The Nigerian billionaire Aliko Dangote constructed the Dangote Oil refinery, which is anticipated to run close to capacity by the end of the year and maybe reach full capacity in the first quarter of 2025, according to analysts.

Hamid claimed that by eliminating freight expenses, buying from Nigeria instead of Europe would result in lower prices for other goods and services. He predicted that African nations would eventually settle on a single currency, which would reduce demand for US dollars.

In the second quarter of 2024, Ghana’s GDP rose 6.9% year over year, primarily due to the robust growth of the extractive industry, which increased demand for petroleum.