Oxfam Accuses World Bank of Funding Tax Cheats in Africa
British non-profit organisation Oxfam has accused World Bank of funding potential tax cheats in Africa.
A report by the UK charity claims three out of four companies doing business with World Bank funds in sub-Saharan Africa last year used tax havens. The Oxfam report was compiled from data released by the recent “Panama Papers” scandal, which exposed the tax haven schemes of world leaders and corporate giants.
Oxfam urges World Bank ensure tax compliance
The report says World Bank has been funding African projects through its private lending arm, the International Finance Corporation. However, 75% of these projects in 2015 were carried out by firms using tax havens to reduce the amount of tax they paid – a scheme that reduces the benefits to the countries hosting World Bank projects, Oxfam says.
“Oxfam analysis reveals that 51 of the 68 companies that were lent money by the World Bank’s private lending arm in 2015 to finance investments in sub-Saharan Africa use tax havens,” the report says.
“Together these companies, whose use of tax havens has no apparent link to their core business, received 84 per cent of the International Finance Corporation’s investments in the region last year.”
Oxfam goes on to urge World Bank to take measures that ensure tax compliance of companies involved in the projects it funds.
“Oxfam is calling on the World Bank Group to put safeguards in place to ensure that its clients can prove they are paying their fair share of tax,” it says in the report.
Cheating African nation
The projects funded by Word Bank in Africa claim to be for the benefit of developing nations like Kenya and its neighbours. However, the use of tax havens by companies involved in these projects cheats those countries out of vital tax income for the sake of cutting costs.
“It doesn’t make sense for the World Bank Group to spend money encouraging companies to invest in “development” while turning a blind eye to the fact that these companies could be cheating poor countries out of tax revenues that are needed to fight poverty and inequality,” Oxfam tax policy advisor Susana Ruiz said.