Economy
Africa Needs Stronger Tax, Trade Laws—Experts
By Modupe Gbadeyanka
Experts have advised African leaders to come up with stronger tax laws and trade treaties in order to block huge amount of money lost to weak tax laws and unfair trade treaties.
At the Pan-African Conference on Illicit Financial Flows (IFFs) from Africa organised by Tax Justice Network Africa (TJNA) in Nairobi, Kenya, speakers agreed that a lot of funds have been lost to weak tax laws and trade treaties and that African countries must begin a holistic review of all trade and tax laws to address this.
According to the News Agency of Nigeria (NAN), over $50 billion has been lost to multinationals who take advantage of weak tax laws and unfair trade treaties.
In an interview with NAN on the sidelines of the conference, Mr Jason Braganza, Deputy Executive Director, TJNA said Africa was yet to ascertain the real amount being lost to IFFs as the quoted $50 billion was just a fraction of the entire sum.
He said that the conference was part of efforts to broaden Africa’s approach at defining and calculating illicit financial flows with a view to stopping them.
Mr Braganza said that there were a number of ways through which multinational companies cheated African countries, taking advantage of weak laws and policies without breaking them.
“When we talk about broadening the definition, what we mean is the need to come up with an approach that includes aggressive tax planning by high net worth individuals as well as big multinational corporations who engage in harmful tax practices in order to maximise their profits.
“They take advantage of weak tax policies and tax laws in many African countries, which make the countries vulnerable to these multinationals who are able to manipulate the laws without breaking them.
“Therefore taking away the profits from where they are generated and moved to other tax jurisdictions like offshore tax havens where there is high level of secrecy and tax laws are in favour of multinationals.
“The way businesses conduct their activities, the international financial architecture is very fractured, fractured in the sense that the complexity of operating tools and models for business transactions means that one single business can have over 100 subsidiaries or special purpose vehicles.
“This sort of arrangement provides them with the platform to hide or not fully reveal the kind of activities they have been undertaking, the kind of incomes they are making.
“They are able to hide what they are supposed to be paying to government, this is a big problem,” he said.
Mr Braganza said the illicit ways high net worth individuals and corporations were exploiting weak existing laws, policies and legislation was having a detrimental impact on government ability to collect revenue.
He said also that it significantly impacted on government’s ability to implement development projects.
He therefore advised African countries to review their laws to check such excesses by multinationals.
Mr Braganza said also that there were weak laws that allowed multinationals to trade within themselves and either charge lower or higher rates to evade tax liability.
He said that the law review should also include transparency in transactions and audit reports adding that African countries must collaborate to check the activities of these companies.
He also called for review of all trade treaties especially those entered into for decades and were not beneficial to Africa but to the western nations.
“There are a number of laws, policies and strategies that need to be strengthened in order to avoid and close these loops.
“In Uganda for instance, the government has taken the decision to suspend the negotiation of new treaties pending a review of all existing treaties to understand what exactly is contained in these treaties.
“You can go even in the case of Kenya, there are treaties that dates back to the 70s that have never been analysed for people to understand what the country has signed itself up for.
“The first step is to really appreciate that some of the treaties that were signed several decades ago are harmful and detrimental to the economies.
“The second point is for members of parliament to get involved in this conversation and be part of the negotiation process that governments enter into and not leave it only to technocrats or bureaucrats.
“This is because the lawmakers are the ones who pass laws that have significant impact on how a government or an economy can run,” he said.
Mr Braganza also called on African government to show more political commitments to implement recommendations that had already been made on these issues.
“The high level panel is a good example, they have made very good set of recommendations that can actually help African governments to try and stop IFFs, to better improve the way they negotiate treaties.
“The African Tax Administrative Forum (ATAF) is another platform where governments should sign on, because ATAF is responsible and involved in developing legislation and policy guidelines for Africa perspective.
“So we advise that African countries review all trade treaties but most importantly, implement the recommendations that they have signed up to.
“There is a charter that all heads of state of AU have signed up to, committing themselves to working with their members of parliament to try and curb IFFs,” he said.
Mr Braganza said that TJNA had also been engaging parliaments from different African countries to build their skills to understand the technicality of some of these issues so as to inform their law making process.
He added that TJNA had a specific programme, African Parliamentary Network on Illicit Financial Flows and Tax which was dedicated to working with lawmakers across the continent.
By Adedapo Adesanya
The Federal Competition and Consumer Protection Commission (FCCPC) has expressed concern that Nigerian consumers have yet to benefit from lower prices despite the recent sharp decline in global crude oil prices.
Business Post reports that crude prices currently trade around $69 and $71 per barrel in the international market.
The commission stated on Sunday that following a market surveillance exercise, the review of gantry prices from local refiners, marketers, depot operators and retail outlets showed only token reductions, not aligned with the steep drop in international crude prices.
The chief executive of the agency, Mr Tunji Bello, said that though the FCCPC does not set petroleum prices in a deregulated market, it is mandated by the Federal Competition and Consumer Protection Act, 2018, to promote competition and protect consumers from unfair business practices.
“To be clear, the commission does not regulate or approve petroleum prices in a deregulated downstream market. Our responsibility under the Federal Competition and Consumer Protection Act, 2018, is to promote competitive markets, prevent anti-competitive conduct, and protect consumers from unfair, deceptive and exploitative business practices,” Mr Bello said.
“We are concerned that while dealers often respond swiftly by hiking pump prices whenever crude prices rise, it is curious that it is taking forever for consumers to benefit significantly when crude prices fall. Competitive markets must work fairly in both directions,” he added.
The organisation noted that crude prices fell to about $73 per barrel after a recent ceasefire between the United States and Iran and the reopening of the Strait of Hormuz, down from a peak near $120 per barrel in April.
During the April–May price spike, petrol prices rose to between N1,350 and N1,500 while diesel traded around N2,000. In February, PMS averaged between N800 and N900. Presently, average retail PMS nationwide is about N1,200, with some local refiners listing gantry prices between N1,025 and N1,075.
The FCCPC acknowledged that domestic fuel prices are affected by multiple commercial factors, including refining costs, foreign-exchange movements, logistics, financing and distribution expenses, but said competitive market dynamics should have passed more of the recent international cost declines to consumers.
“Market liberalisation does not diminish businesses’ obligations to compete fairly or consumers’ right to fair treatment,” Mr Bello added. “Where credible evidence indicates conduct that undermines competition, exploits consumers or otherwise contravenes the Federal Competition and Consumer Protection Act, the Commission will investigate and take appropriate enforcement action,” urging consumers to report suspected anti-competitive conduct, misleading pricing or other unfair market behaviour via its established complaint channels.
By Adedapo Adesanya
Four securities weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.95 per cent on Friday, erasing N41.17 billion from the bourse, which had its market capitalisation at N2.567 trillion compared with the previous session’s N2.618 trillion.
In the same vein, the NASD Unlisted Security Index (NSI) decreased at the close of business by 85.28 points to 4,277.07 points from 4,362.32 points.
The price decliners were led by 11 Plc, which gave up N20.50 to sell at N200.50 per share compared with the preceding day’s N221.00 per share, FrieslandCampina Wamco Nigeria Plc dropped N16.94 to close at N155.20 per unit versus Thursday’s closing price of N172.14 per unit, Central Securities Clearing System (CSCS) Plc went down by N2.11 to N84.68 per share from N86.79 per share, and Afriland Properties Plc lost 11 Kobo to end at N16.74 per unit, in contrast to the N16.85 per unit it closed a day earlier.
During the trading day, the value of transactions jumped by 172.1 per cent to N29.9 million from the preceding session’s N10.9 million, and the volume of trades soared by 136.5 per cent to 955,096 units from the previous 403,901 units, while the number of deals went down by 11.4 per cent to 31 deals from 35 deals.
Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 68.6 million units sold for N4.7 billion.
GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, trailed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
By Dipo Olowookere
The last trading session of this week on the floor of the Nigerian Exchange (NGX) Limited ended on a negative note, with a 0.66 per cent loss on Friday.
This was influenced by sustained selling pressure and cautious trading, which forced investors into profit-taking.
Data obtained by Business Post showed that the energy sector fell by 4.66 per cent, the insurance counter dipped by 2.23 per cent, the consumer goods index depreciated by 0.96 per cent, and the banking segment shed 0.28 per cent, while the industrial goods space remained unchanged.
At the close of business, the All-Share Index (ASI) of Nigeria’s stock exchange went down by 1,531.81 points to 232,049.02 points from 233,580.83 points, and the market capitalisation dropped N983 billion to settle at N148.905 trillion compared with Thursday’s N149.888 trillion.
Aradel was the worst-performing equity after it lost 10.00 per cent to close at N1,417.50. International Energy Insurance slipped by 9.95 per cent to N5.79, Trans-Nationwide Express depreciated by 9.89 per cent to N3.28, eTranzact crashed by 9.79 per cent to N14.75, and UPDC slumped by 9.72 per cent to N28.12.
The best-performing equity for the day was Universal Insurance, which gained 6.32 per cent to close at N1.01, McNichols grew by 5.52 per cent to N8.60, Linkage Assurance expanded by 4.67 per cent to N1.57, NGX Group appreciated by 4.35 per cent to N120.00, and Transcorp increased by 3.62 per cent to N41.50.
As look at the activity level indicated that investors traded 388.7 million stocks worth N18.4 billion in 44,631 deals compared with the 393.7 million stocks valued at N19.2 billion executed in 45,813 deals a day earlier, representing a decline in the trading volume, value, and number of deals by 1.27 per cent, 4.17 per cent, and 2.58 per cent, respectively.
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