Remarks by Angel Gurría
25 November 2019 - Paris, France
(As prepared for delivery)
Dear Ministers, Ladies and Gentlemen:
I am delighted to welcome you to tonight’s dinner for the Africa Initiative. This important initiative was launched by the Global Forum in 2014 and is helping African countries realise the full potential of progress made by the global community to improve tax transparency and strengthen international tax co-operation. It is hugely encouraging to see so many leaders from across Africa gathered here tonight! Special thanks go to our growing number of partner organisations, our donors, and our newest observer organisation, the African Union Commission.
When we launched the Africa Initiative at the Global Forum in Berlin, we had 17 members, eight of which joined as first movers. Since then, its membership has almost doubled. This is great progress!
For the past decade, the OECD and the Global Forum have been leading the fight against tax evasion and illicit financial flows by encouraging countries to agree to higher standards on transparency and exchange of tax information. These standards have achieved global endorsement from our 158 members, including 31 from Africa, as well as international bodies, such as the G20. Our efforts have been complemented by capacity building programmes, such as the OECD-UNDP Tax Inspectors Without Borders Initiative.
We know that implementing the standards works! Around the world, additional revenues identified from implementation over the last 10 years amount to around EUR 102 billion. Most of these revenues are attributable to voluntary disclosure of offshore financial assets and income in the run-up to full implementation of the AEOI Initiative.
Africa suffers disproportionately from illicit financial flows. Some years ago, it was estimated that around 30% of Africa’s financial wealth was held offshore. This figure could be even higher now. Indeed, in his address to the UN General Assembly last September, President Buhari stated that Nigeria has lost nearly USD 160 billion to illicit financial flows over the last nine years. Tax revenue losses in respect of personal income taxes on investment income alone run to billions of dollars that could otherwise be spent on healthcare, education and infrastructure.
We need to leverage this offshore wealth into Africa’s economic development. The potential for increased revenue is all the more important as tax revenues have stalled in Africa at around 17.2% of GDP, as highlighted by Revenue Statistics in Africa 2019, which was published last week by the OECD, the African Union Commission, and the African Tax Administration Forum, with financial support from the EU.
We have the tools to help you do this, and our 2018 Report on Tax Transparency in Africa shows that many of you are starting to use them.
Since 2015, African countries have tripled their number of Exchange of Information (EOI) relationships, multiplying opportunities to send and receive information. Before the Africa Initiative started in 2015, only five African countries had ever sent an EOI request. This number increased to 18 at the end of 2018. And the money is starting to come in! For example, after making 61 requests, Uganda has recovered $25 million in tax and penalties. It’s just the beginning!
This is very significant progress, but the world has not stood still since we last met. To avoid Africa falling behind, progress must be made to tackle offshore tax evasion by wealthy Africans. More African countries need to participate in the automatic exchange of information.
I welcome Ghana’s first steps in the automatic exchange of financial account information and look forward to the completion of its implementation. I hope many of you will follow its positive example.
Africa will be a massive net beneficiary of AEOI. But you have to lead, set the agenda, commit the resources, support your tax administrations and unlock the potential this tool provides. Implementing transparency and exchange of information brings some costs, but they are minimal compared to the benefit: they are engines of domestic resource mobilisation!
Ladies and Gentlemen:
Please count on the continued support of the OECD and the Global Forum. All of our partners and donors are behind you. We welcome the political backing of the African Union Commission, which has launched a promising collaboration with the Global Forum to promote tax transparency in Africa. While there is much to be done, and no magic bullets, we are in it for the long haul!
I am confident that, with our collective commitment, we will achieve great things over the next five years. Thank you.