The pounding pleas for better public services, social protection and better employment opportunities by citizens have time and again been responded to with “where is the money?” stances from governments. Confirming that social justice is not a priority for them, we have watched governments tolerate widespread tax abuse at the expense of the citizenry. Worse, some have victimized themselves by claiming that they are constrained resource-wise and are left with no option but to turn to the private sector with as many incentives as possible in order to finance their programmes. In doing so, our authorities have allowed billions and billions of money to bleed through the system, leaving it frail. These billions that get away would alternatively finance country’s infrastructure development initiatives for example in the case of Uganda which is approximated to lose 2 trillion shillings to Illicit Financial Flows (IFFs) annually, an amount that stands side by side with the country’s health budget.

With reports estimating that almost USD416 billion is lost from public revenue across the world each year, Akina Mama wa Afrika (AMwA) with support from Urgent Action Fund-Africa convened a stakeholder engagement on illicit financial flows focusing on how the legal and policy framework governing Uganda’s trade, investment, tax and extractives sectors is contributing to the loss of domestic revenue. The 31st October meeting that brought together 27 stakeholders representing government entities, the private sector, traders and civil society organizations sought to identity areas of policy advocacy that would contribute to strengthening the legal and policy framework governing IFFs in the country. Doing things the Feminist way, the meeting also explored the disproportionate impact of IFFs on gender justice.

If we are to really achieve self-sustainability as a continent, we must curb illicit financial flows. This is the first of many conversations about flipping the narrative of Africa from being a continent in constant need of aid to one that can sustain its development by effectively managing its finances. – AMwA’s Leah Eryenyu during her opening remarks. 

To analyse how Uganda’s regulatory framework on commercial/business activities enables illicit financial flows, lawyer and tax expert, Andrew Kyambadde from Destiny Consultants Limited and the East Africa School of Tax guided participants in a discussion which highlighted how the legal regime in Uganda on commercial activities and extractives sector both contributes and addresses the movement of money or value that is illegally earned, transferred or utilized across borders, as IFFs were defined. Citing the Income Tax Act, Cap 340 (as amended) which mandates Ugandan citizens with a constitutional duty to pay taxes as well as indicates penal provisions for failure to comply with the taxation laws of Uganda, Mr. Kyambadde explained the challenges of abusive transfer pricing practices, an unregulated digital economy and non-declaration of income facilitated by the self-assessment regime of the Uganda Revenue Authority that limit how far the law can go in curbing illicit financial practices. Another example cited was the Companies Act, 2012 which provides for annual compliance returns by registered companies and penalties such as lifting the veil of incorporation in case of tax evasion. This law is impeded by the fact that the code of corporate governance is mandatory to only public companies while numerous private companies are registered and operational in Uganda.

For the legal and policy framework to be strengthened, punitive sanctions must be put in place to deter tax evasion considering the weakness of the current penal laws. The Financial Intelligence Authority must be given the power to prosecute financial intelligence crimes and enhancing management of the extractives sector, specifically joining the Extractives Industries Transparency Initiative. (EITI) – Andrew Kyambadde while giving recommendations to strengthen legal response to IFFs in Uganda.

In a further examination of IFFs in Uganda, Bazira Henry Mugisha the Executive Director of Water Governance Institute and a member of the Tax Justice Alliance Uganda led participants in a conversation on Double Taxation Treaties (DTTs) in Uganda. Reporting that Uganda loses about 2.6 billion Shillings annually to double taxation, Mr. Bazira underscored the consequences of illicit and licit aggressive financial flows on governments such as a 4-10% cost of GDP annually. He also alluded to the Mauritius Leaks report of the International Consortium of Investigative Journalists (ICJ) published on July 23rd, 2019 and stressed how much Multi-National Corporations (MNCs)  harm the ordinary citizen who bears the tax burden when MNCs do not pay their fair share of taxes or pay less than their due. Mr. Bazira recommended that the challenges experienced with regulating the digital economy be addressed and DTTs and harmful practices that prevent effective revenue collection be renegotiated and countered respectively.

For every tax holiday we give, we have given that entity our tax. It is citizens who will compensate for that loss in revenue and consequently having a negative effect on the availability of social services – Henry Bazira

Prompted by the above discussion, participants led by Elliot Orizaarwa, the Executive Director of Women and Girl Child Development Association discussed some of the current interventions to curb IFFs by civil society in Uganda. The tweet chat hosted by Akina Mama wa Afrika on 8th October to increase public awareness of IFFs under the hashtag #StopTheBleedingUg was mentioned as one of such interventions. At the end of the convening, stakeholders were tasked to identify and develop a collective six-month advocacy strategy that will contribute to tackling IFFs in Uganda.

Whether legal or illegal, IFFs are a key hindrance to sustainable development and the overall realization of human rights. Governments know where the money is. Here and now, we implore African governements to follow the money!