We are working to speed up global progress in tackling illicit financial flows, tax evasion and tax avoidance – abusive practices that perpetuate economic inequalities and undermine sustainable development in Africa. In Kenya and South Africa, we are working to make government policies and decisions fairer, so they benefit some of the most underserved communities.
What's at stake?
Inequality is a key impediment to sustainable development and social justice. This is particularly true in the case of Africa, where the COVID-19 pandemic has further aggravated social and economic inequalities. Despite two decades of high economic growth, resource-rich Africa is home to 10 of the world’s 20 most unequal countries. While extreme poverty is rising, three African billionaires have more wealth than the poorest 50 per cent of the population across the continent.
Illicit financial flows – movement of money that is illegally acquired, transferred or spent across borders – cause greater inequality both within countries and between developing and advanced economies. Although there is little data on the actual amounts lost to illicit financial flows, it has been estimated that nearly US$89 billion is siphoned from the continent annually. What’s more, 75 per cent of the wealth of African millionaires and billionaires is held offshore, resulting in at least US$14 billion annually in uncollected tax revenue. These are much-needed funds that should be financing public services to advance human rights, achieve Sustainable Development Goals and narrow inequality gaps – but are stolen and funnelled through the loopholes of the global financial system.
What’s more, public resources that are available to African states are not always allocated, distributed and spent in a fair manner. Undue influence and corruption at the national level result in unfair and skewed policies and decisions, poor provision of public services and overall unequal distribution of wealth and opportunities, creating a vicious circle and perpetuating high levels of inequality.
For example, in South Africa, a legacy of colonialism and Apartheid, coupled with the high levels of grand corruption of the past decade places the country as the most unequal of the world.
Similarly, in Kenya, corruption and an inability to generate sufficient revenues to fund public services such as education, health and welfare is a key cause of poverty and inequality. The richest 0.1 per cent of the population owns more wealth than the bottom 99.9 per cent.
What we're doing about it
The Rallying Efforts to Accelerate Progress (REAP) project aims to holistically address economic inequalities in Africa through tackling illicit financial flows, tax evasion and tax avoidance, while recognising the centrality of power relations and imbalances at the intersection of income and wealth disparities, gender and social status.
At the national level, with a focus on tax incentives in Kenya and on land governance in South Africa, the project seeks to strengthen social accountability over policies and decisions fuelling and sustaining income and wealth inequalities and to promote greater access to public resources by vulnerable and marginalised groups.
At the same time, the project will promote greater regional and global action to disrupt the mechanisms enabling illicit financial flows, tax evasion and tax avoidance and undermining the sustainable development of countries in Africa.
The REAP project runs from April 2021 to March 2024 and is funded by the European Commission’s Directorate-General for International Partnerships. The initiative involves the collaboration of the Transparency International’s Secretariat and our national chapters in Ethiopia, Ivory Coast, Kenya, Mauritius, Morocco, Nigeria, Republic of Congo, South Africa and Zambia, as well as other partners.
To tackle inequalities in Africa, the project seeks to address national specificities fuelling inequalities within countries in addition to tackling cross-border issues that impact the region.
The REAP project will supporting civil society in key countries to generate new evidence, raise public awareness, advocate for change and form new partnerships and coalitions to understand the causes, consequences and solutions for reducing income and wealth inequality in the region. The project will seek to strengthen the capacities and influence of civil society organisations to contribute to policy formulation and monitoring of commitments and implementation that consider, reflect and advance the priorities and needs of those most left behind.
In Kenya, the project focuses on strengthening the capacity of local civil society organisations and of women and other marginalised groups to oversee the award of tax incentives, public spending and contribute to public policy. The advocacy will seek to curb fiscal practices and incentive schemes that exacerbate inequality and constrain domestic resource mobilisation, while promoting viable alternatives that can serve to reduce inequalities at the national level.
In South Africa, the initiative addresses income and wealth inequality related to land rights, including land reform and access to natural resources by ensuring that those living in traditional communities can participate in decisions affecting their land and to claim their right to eviction compensation. The aim is also to hold duty-bearers to account to ensure rural communities including women and other vulnerable groups can effectively participate in mining approval processes and enjoy their land rights, and that the policies and practices on participation and allocation of royalties benefit these communities.
Regionally and globally, the REAP project aims to foster stronger action to disrupt mechanisms enabling illicit financial flows, tax evasion and tax avoidance that are undermining the sustainable development of countries in Africa and increasing inequality within the region. In partnership with our local partners, this initiative will:
- generate greater evidence on the impacts of illicit financial flows, tax evasion and tax avoidance across the region
- identify key destination countries where international cooperation should be strengthened
- expose inadequacies in legal and institutional frameworks, particularly in transit and destination countries and financial centres in the region
- raise awareness and the private sector on the impact of illicit financial flows linked to corruption and tax abuse
- advocate for effective regional and global instruments to help African countries that suffer from illicit financial flows and abusive tax practices to mobilise more resources and meet their sustainable development targets.
Transparency International works to expose the actors, methods and systems that the corrupt depend upon to facilitate the laundering, transfer and investment of dirty money.
Following our campaign, every country will have to set up a dedicated register of companies' real owners. Now, it’s time to tackle secretly owned trusts.